Tasmania approved $20m loan to troubled Liberty Bell Bay smelter despite high-risk advice

Tasmania's government approved a $20 million loan to the troubled Liberty Bell Bay manganese smelter after being warned the repayment risk was high, according to an internal document. The money was used to help the plant buy ore at a time when it was rapidly running out of cash. The smelter later closed in July and was subsequently liquidated, with more than 200 jobs lost.

The document, obtained under right-to-information laws, says officials were told in July 2025 that Liberty Bell Bay "may run out of available capital by the end of July" and were given four options. Tasmania's coordinator-general, John Perry, recommended an urgent loan of up to $20 million, saying there was a "very high risk" the smelter would not be able to restart without immediate capital. The paper also rated every risk category for the loan as high.

The government ultimately went ahead with the loan to allow the smelter to purchase ore and resume operations. It is now trying to recover the money by selling the ore, according to the document. Liberty Bell Bay was the country's only manganese smelter, making the decision significant for both industrial policy and public finances in Tasmania.

The case sits against a wider backdrop of supply disruption and market pressure in the manganese sector. More than two years earlier, a tropical cyclone damaged South32's GEMCO manganese ore operation in the Northern Territory, reducing Liberty Bell Bay's access to its main source of ore and contributing to the chain of events that ended in liquidation. In May 2025, the smelter had already entered limited operations because of ore supply issues, international price volatility and US tariffs, according to its then-owner, GFG Alliance.

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The internal advice also said manganese producers faced broader industry risks, including swings in steel demand and pricing, exchange-rate volatility, supply chain disruption, geopolitical instability and environmental regulation. Those factors were part of the assessment that led officials to conclude inaction was also risky, even though the chance of full repayment was judged to be high risk. The decision highlights the tension between supporting a strategic industrial asset and protecting taxpayers from losses.

What remains unclear is how much of the loan Tasmania will ultimately recover and whether the sale of ore will cover the full amount. The document does not indicate that the repayment risk has been resolved, and the liquidation means the plant's future is no longer in operation. The episode is likely to remain under scrutiny because it combines a public loan, a failed industrial rescue and the loss of more than 200 jobs.

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