In the aftermath of South Australia’s ‘Black’ Wednesday, its biggest miner – BHP Billiton – and last two mineral processors – Whyalla steel maker, Arrium and Port Pirie lead and zinc smelter, Nyrstar, were left powerless and thoroughly crippled as a result.
We’ll start with a couple of pieces that appeared the day after.
The state’s two blast furnaces are in serious trouble following the storm, with the Port Pirie smelter out of action for up to two weeks
29 September 2016
THE Whyalla steelworks is at a “critical” stage and Arrium staff are desperately trying to stop hundreds of tonnes of molten steel from cooling.
The company’s administrator, Mark Mentha, said they were trying to get the steelworks into “safety mode” but it was at a critical stage on Thursday afternoon.
Mr Mentha said Arrium had brought a gas turbine online to generate a small amount of power, but the company was “fearful” grid supplies would take a week to return.
The steelworks had just one operating telephone and with Vodafone and Optus networks out in Whyalla, communication was very difficult
The operation is trying to avoid the solidifying of molten metal which has affected the Port Pirie smelter.
If this was to happen, four 180 tonne ladles full of molten steel would have to be jackhammered out later.
The caster works — the recognisable part of a steelworks where slabs and billets come out — had already cooled and welders would have to go in and cut the steel out.
Mr Mentha said the steelworks had been able to get a gas turbine going and its boilers were trying to generate adequate steam.
“If we can do that we can reheat the blast furnace.”
Mr Mentha said this would allow a number of processes to operate to keep the steelworks from reaching a critical stage.
“We won’t be making anything. We’ll be making sure critical parts of the plant don’t fail.’’
Mr Mentha said it was too early to estimate the cost of the storm outage on the operation, which is on the sale block after being placed in administration early this year.
In some good news, the steel workers on Thursday voted to accept a pay reduction of 10 per cent, a reduction in super payments to the statutory 9.5 per cent level and agreed to a four-year enterprise agreement, bringing them in line with the mine workers.
Mr Mentha said this would give any potential buyer confidence in the industrial relations environment at Whyalla.
Out of Action
NYRSTAR’S Port Pirie smelter will be out of action for up to two weeks and have a $7.3 million impact on the company’s bottom line after the slag in the blast furnace solidified.
Whyalla’s blast furnace is also reaching a “critical” stage in coming hours if power can’t be restored.
Nyrstar said the company tried to keep its operations going with backup power but was not able to.
“A back-up diesel generator at the Nyrstar Port Pirie site sustained the blast furnace for several hours after the power outage commenced.
“However, with the power outage continuing for a prolonged period, the slag in the blast furnace solidified and the blast furnace cannot be tapped.”
“It is expected that the blast furnace will be down for approximately 10 — 14 days for repairs necessitated by the power outage, negatively impacting metals processing (earnings) by approximately EUR 3 — 5 million.
Chief Executive Bill Scotting said: “We are obviously very disappointed that the power supply in South Australia has failed and the impact that this has caused to the Port Pirie plant.
“The Port Pirie site is working incredibly hard to ensure we are in a position to restore the blast furnace to full functionality as soon as full power is restored. No other plant damage has occurred and the outage is not expected to have any impact to the Port Pirie Redevelopment schedule.”
BHP said Olympic Dam was safely shut down.
Following the loss of power in South Australia on Wednesday, 28 September, Olympic Dam was able to safely shut down operations and demobilise site.
Back-up generators are currently providing power to critical infrastructure, which will allow a restart of operations when power is restored.
Our primary focus is the safety and welfare of our people. We are liaising closely with Electranet and the State Government to ensure power is restored to Roxby Downs town and Olympic Dam as soon as possible.
Production impacts will be provided in the next quarterly operational review, scheduled for 19 October.
Olympic Dam produces more than 10 per cent of BHP’s copper output and uses as much power as a substantial regional city.
Australian Industry Group chief executive Innes Willox said the power outages compounded SA’s already poor reputation for high power prices and power availability.
“The blackout adds a sobering new dimension to SA’s power woes, which have been undermining confidence and causing major price spikes for some time.
“The storm damage to power lines has been severe and many individual businesses will have incurred big costs due to the power outage occurring in the middle of production processes and we will be talking to members to assess the fuller implications.
“It is hard to accept that the entire state is vulnerable to shutdown in a critical incident. Dealing with this situation needs to be a national priority and we are talking to all concerned to ensure future disruptions are minimised.
“The events will need to be reviewed to see how the system performed, how it might be improved, and how often we should anticipate comparable challenges to the network.’’
“All efforts should be taken at a local and national level to avoid a repeat of the considerable cost and inconvenience to business and the community from the critical power failure in South Australia.”
Bailies Holst chief economist said SA needed to rethink its entire approach to electricity management.
“Electricity failures of this nature cause enormous damage to South Australia’s reputation interstate and overseas,” Mr Gobbett said.
“It’s not just the money lost by shutting up the entire shop for a day or two but the long term effects this has on the State’s credentials as a business friendly destination.
“This is a real wake up call for the State to completely rethink its approach to power, go back to the drawing board and come back with a real solution that incorporates all forms of energy including nuclear.”
Nyrstar updates on impact of state-wide power outage on Port Pirie
29 September 2016
Nyrstar NV (“Nyrstar”) announces today that severe storms experienced in South Australia throughout Wednesday 28 September 2016 caused a state-wide power loss which led to an outage of the entire Port Pirie smelter including the blast furnace.
A back-up diesel generator at the Nyrstar Port Pirie site sustained the blast furnace for several hours after the power outage commenced. However, with the power outage continuing for a prolonged period, the slag in the blast furnace solidified and the blast furnace cannot be tapped. It is expected that the blast furnace will be down for approximately 10 – 14 days for repairs necessitated by the power outage, negatively impacting Metals Processing EBITDA by approximately EUR 3 – 5 million.
Commenting on the production disruption, Bill Scotting, Chief Executive Officer, said: “We are obviously very disappointed that the power supply in South Australia has failed and the impact that this has caused to the Port Pirie plant. The Port Pirie site is working incredibly hard to ensure we are in a position to restore the blast furnace to full functionality as soon as full power is restored. No other plant damage has occurred and the outage is not expected to have any impact to the Port Pirie Redevelopment schedule.”
As molten metal froze solid, and the lights went out under-and-above ground at Roxby Downs and Olympic Dam, SA’s last big productive industries started tallying up the costs, with worse to come.
Miners, industry face $150 million hit from SA blackout
4 October 2016
South Australia’s biggest mining and industrial sites are facing revenue losses of more than $150 million from last week’s blackout as they plan for at least another week without power.
And the extended production suspension is starting to impact on global metal prices, helping pushing lead prices on the London Metal Exchange to a 16-month high.
The already struggling Whyalla steelworks and the Prominent Hill copper and gold mine would be without power until at least Tuesday next week, their operators said yesterday.
And while BHP Billiton’s big Olympic Dam copper and uranium mine, the nation’s biggest copper mine and the state’s biggest power user, will not say when it expects its power to be back up and running, it is thought to be in the same situation.
The sites have now been off line for five days since severe storms toppled transmission towers in the state’s north and caused the entire South Australian power system to trip.
Power has now been restored to residents around the state.
Calculations by The Australian show the suspension of just Whyalla, Olympic Dam and Prominent Hill is costing about $12m a day in lost revenue, meaning a 12-day closure, if power is restored by Tuesday, represents $144m in lost revenue.
On top of this, Nyrstar’s Port Pirie lead smelter, where molten slag froze in the blast furnace because of the extended power failure, has flagged pre-tax earnings losses of up to $7m as it takes 10 to 14 days to repair its plant.
Yesterday, Prominent Hill’s owner, Oz Minerals, which is facing estimated revenue losses of $3m a day, told the stock exchange the extended outage meant the company would struggle to meet full-year gold production guidance.
“Electricity transmission to OZ Minerals’ Prominent Hill mine is expected to be progressively restored in the next seven to 10 days, following recent severe storm damage to South Australia’s transmission lines,” it said.
“The company reiterates that the time frame for full restoration of power to Prominent Hill is ultimately outside of its direct control.”
At Whyalla, whose owner Arrium is in administration and which is being set up for a trade, there is also no sign of a near-term power fix.
“They’re still not producing any steel … and they’ve been told they won’t get full power back until Tuesday next week,” a spokesman for Arrium administrator KordaMentha, which estimates the outage is costing $30m a week, said yesterday.
The good news at Whyalla is that enough self-generated and grid power has been obtained to avoid similar plant damage to that experienced at Port Pirie.
The bad news is that buyers looking at Arrium’s Australian business, which includes South Australian iron ore mines and other steel businesses, have been alerted to a major power supply risk at Whyalla.
Port Pirie is one of the world’s biggest lead smelters, producing 185,000 tonnes a year of the industrial metal, along with copper concentrate, silver and gold.
The outage contributed to an 11 per cent jump in the London Metal Exchange lead price last week to $US2123 a tonne.
It was the metal’s biggest weekly percentage price jump since 2010.
“You can’t remove this much metal from the market for that amount of time and not expect people to scramble around for new supplies,” a Sydney metals trader who has been buying lead futures since the storm hit told Reuters.
There were also some reports attributing a rise in copper prices to suspended production at Olympic Dam and Prominent Hill, where the outage has suspended about 3 per cent of the world’s mined copper production.
BHP, which is facing revenue losses of $5m a day from Olympic Dam, said power had been returned to the town of Roxby Downs but the mine remained on care and maintenance.
South Australia’s obsession with wind power has relegated it to the status of a permanent economic basket case; with the highest rate of unemployment in the Nation (and soon to rise further with the closure of car maker, General Motors Holden), those with some sense of social decency might expect its political brains trust to slam the door on its wind power experiment and start working overtime to salvage what’s left of industry and the jobs that come with it.
Alas. The latest ‘plan’ from its vapid Premier, Jay Weatherill is aimed at keeping the lights on in Adelaide (where the voters are), while cutting power to its miners in the North of the State.
In order to prevent the grid from collapsing every time there’s a total and totally unpredictable collapse in wind power output (see above and our posts here and here), the grid manager has been directed to trip a ‘kill switch’, that will cut power to SA’s two biggest mining operations: BHP Billiton’s Olympic Dam and OZ Mineral’s Prominent Hill.
‘Kill switch’ for mines to save electricity grid
Michael Owen/Rebecca Puddy
4 October 2016
A transmission company has been forced to install an interim “kill switch” to immediately cut power to BHP Billiton and OZ Minerals at their Olympic Dam and Prominent Hill mines to protect South Australia’s network from potential voltage collapse after the exit of the state’s last coal-fired baseload power station.
Green energy policies championed by the Weatherill Labor government forced Alinta Energy to permanently close the Northern Power Station at Port Augusta on May 9, leaving the state reliant on interconnection with Victoria for energy stability given the state’s more than 40 per cent mix of wind and solar generation.
A report by ElectraNet in August on the power station closure forecast “significant challenges for transmission network voltage control” in the manufacturing and heavy industry employment bases of the Upper North, Mid North and Eyre Peninsula regions.
ElectraNet, operator of the state’s high-voltage transmission infrastructure, warned of a potential for voltage collapse without the reliable support the Northern Power Station had provided, noting the network was vulnerable in times of low wind generation, combined with three specific scenarios of moderate to high system demand. The report said no “credible” option had been commissioned to deal with these “limitations”, which could increase because of “future operating conditions”, including more demand from the huge Olympic Dam operation.
“The under-voltage load shedding scheme … has been installed as one of the interim measures that will eliminate the risk of voltage collapse spreading throughout the transmission system,” the report said. “This risk if not addressed had the potential to cause widespread power outages under certain network conditions.”
The affected line “provides supply to BHP Billiton’s operations at Olympic Dam, OZ Minerals’ operations at Prominent Hill and the town of Roxby Downs”.
“Specifically, this scheme will disconnect supply … thus shedding all of the demand that would have been supplied by that line at Olympic Dam, Prominent Hill and Roxby Downs,” the report said. “However, this scheme is not considered to provide sufficient support on an enduring basis. The risk of voltage collapse is a function of both overall system demand and local wind farm generation.”
ElectraNet has proposed five “credible” options for a permanent fix at a cost of up to $100 million, with submissions due by November 4. Last Wednesday’s statewide blackout has forced BHP to suspend operations at the Olympic Dam site, where it produces copper, gold and uranium, while OZ Minerals has halted production at its Prominent Hill copper and goldmine. Roxby Downs was without power for two days until it was restored on Friday night.
BHP and OZ Minerals yesterday declined to comment, although the report noted ElectraNet was “co-ordinating with both” miners. A BHP spokeswoman said its Olympic Dam operations remained under “care and maintenance … until full power is restored”.
ElectraNet said yesterday three out of four power circuits to northern SA remained out of service.