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Tasmania loaned $20m to smelter despite high-risk warning
Government advisers warned the loan to Liberty Bell Bay was risky, but said doing nothing was riskier. The smelter closed anyway and was liquidated.
In brief
Government advisers warned the loan to Liberty Bell Bay was risky, but said doing nothing was riskier. The smelter closed anyway and was liquidated. Tasmania loaned Liberty Bell Bay twenty million dollars despite internal advice the risk was high, because inaction was deemed more dangerous. The smelter closed in July…
Smelter ran out of money fast
In July 2025, Liberty Bell Bay, Australia's only manganese smelter, was about to run out of capital. The Tasmanian government was asked to decide what to do.
Why the smelter was in trouble
A tropical cyclone had damaged South32's GEMCO manganese ore operation in the Northern Territory, cutting off Liberty Bell Bay's main ore supply. The smelter entered limited operations in May 2025.
Government rated every risk as high
Coordinator-general John Perry recommended a twenty million dollar loan but his office rated every risk category as high. The smelter's owners GFG Group appeared unable or unwilling to provide capital.
“LBB's owners GFG Group appear unable and/or unwilling to provide any capital into the business.”
Four options on the table
The coordinator-general presented four choices: do nothing, provide the twenty million dollar loan, support a sale through White Oak private equity, or provide a smaller conditional loan.
Doing nothing was deemed riskier
Perry's paper said doing nothing posed a significant risk. Closure could impact the state economy by five hundred million dollars a year. The risks of the loan were elevated but inaction seemed worse.
“While there is clearly an elevated risk in relation to this transaction the broader economic and strategic implications of inaction could prove to significantly more severe.”
Government approved the twenty million
The Tasmanian government decided to proceed with the twenty million dollar loan to allow Liberty Bell Bay to purchase ore and restart operations at the smelter.
Smelter closed anyway in July
Liberty Bell Bay closed in July this year and was subsequently liquidated, resulting in the loss of more than two hundred jobs. The smelter's administrator EY Parthenon believed it had been insolvent from May first.
Government pursuing recovery through ore
Minister Felix Ellis said the government stood by its decision and understood the risks. State-appointed receivers are pursuing recovery through the secured ore, with the final amount recoverable dependent on the sale outcome.
“We understood the risks were present, but the released documents show the advice was that the consequences of doing nothing were greater.”
What to remember
Tasmania loaned Liberty Bell Bay twenty million dollars despite internal advice the risk was high, because inaction was deemed more dangerous. The smelter closed in July and was liquidated.
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