Tasmanian government loaned $20m to smelter despite high risk, documents reveal

Liberty Bell Bay closed in July, more than 200 jobs lost, and administrator says company was insolvent months earlier

By LineZotpaper

Published20 October 2026

Read Time2 min

Sources2 outlets

The Tasmanian government approved a $20 million loan to the country's only manganese smelter last year despite being warned there was a very high risk the money would not be recovered, internal documents show. The Liberty Bell Bay smelter closed in July and was subsequently liquidated, with the loss of more than 200 jobs.

Documents obtained by the ABC under right-to-information reveal that in July 2025, the Tasmanian government was told Liberty Bell Bay "may run out of available capital by the end of July" and was given four options. A paper from the state's coordinator-general, John Perry, recommended an urgent loan of up to $20 million, stating there was a "very high risk" the smelter would not be able to restart without an immediate capital injection.

The paper rated every risk category for the loan as "high", including the risk that the value of security provided would not cover the outstanding amount. It also noted that Liberty Bell Bay's owner, GFG Group, appeared "unable and/or unwilling to provide any capital into the business".

However, the document concluded that the risks of doing nothing were greater. It estimated the smelter's closure could impact the state economy by $500 million a year if it failed to reopen. The other options considered were a staged financial support package, a sale through US-based private equity firm White Oak, or a smaller loan conditional on security that could force administration. The sale option was deemed "more than what is required" and not good value for money.

Minister for Business, Industry and Resources Felix Ellis said the government stood by its decision to give workers the best possible chance of a future. "We understood the risks were present, but the released documents show the advice was that the consequences of doing nothing were greater," he said in a statement. He said the loan was secured, funds were paid directly to the ore supplier, and state-appointed receivers were pursuing recovery through the secured ore.

The smelter's administrator, EY Parthenon, said it believed the company had been insolvent from as early as May 1, 2025. However, Liberty Bell Bay's directors signed a solvency declaration in August 2025 before the loan was executed.

Analysis

Why This Matters

Tasmanian taxpayers face a potential loss of $20 million if the secured ore does not sell for enough to cover the loan.
More than 200 workers lost their jobs when the smelter closed, highlighting the human cost of the business failure.
The case raises questions about government decisions to bail out struggling industries, especially when the risks are well documented.

Background

Liberty Bell Bay was Australia's only manganese smelter, processing ore used in steelmaking. In early 2025, a tropical cyclone damaged South32's GEMCO operation in the Northern Territory, disrupting Liberty Bell Bay's main ore supply. The smelter entered limited operations in May 2025, with owner GFG Alliance citing ore supply issues, international price volatility and US tariffs. The Tasmanian government stepped in with a $20 million loan in July 2025, but the smelter closed permanently in July 2026 and went into liquidation.

Key Perspectives

Tasmanian Government: It acted to protect workers and the broader economy, with advice showing the consequences of inaction could have been far more severe. The loan was secured and recovery efforts are underway. Workers and Community: More than 200 jobs were lost despite the loan, and the closure has affected the local economy in northern Tasmania. Some may argue the government should have seen the risks more clearly. Critics and Fiscal Watchdogs: The decision to lend to a company that may have been insolvent at the time raises concerns about due diligence and taxpayer exposure. The internal risk assessment was uniformly high, yet the loan went ahead.

What to Watch

The outcome of the sale of the secured ore, which will determine how much of the $20 million is recovered.
Any potential inquiry into the government's decision-making process and the adequacy of the solvency declaration.
The future of the Liberty Bell Bay site and whether any buyer will reopen the smelter.

Sources

Loan of $20m to troubled smelter deemed high risk, govt went ahead anyway · Just In
Loan of $20m to troubled smelter deemed high risk, govt went ahead anyway · Latest business news

Checked

11 claims in this story checked against 1 source: 9 supported.

Show each claim

SupportedThe Tasmanian government loaned the smelter $20 million despite a high-risk warning, as the headline says.Just In: “The Tasmanian government ultimately decided to proceed with the $20 million loan to allow Liberty Bell Bay to purchase ore and restart operations at the smelter.”
Partly supportedThe government was warned there was a very high risk the loan money would not be recovered.Just In: “The document stated manganese producers carried “industry and sector risks””
SupportedThe government was told Liberty Bell Bay “may run out of available capital by the end of July”.Just In: “the Tasmanian government was told Liberty Bell Bay "may run out of available capital by the end of July"”
SupportedThe coordinator-general’s paper said there was a “very high risk” the smelter could not restart without an immediate capital injection.Just In: “stating there was a "very high risk" the smelter would not be able to restart without an immediate capital injection.”
SupportedThe paper said GFG Group appeared “unable and/or unwilling to provide any capital into the business”.Just In: “"LBB's owners GFG Group appear unable and/or unwilling to provide any capital into the business," the paper stated.”
Partly supportedOne alternative was a staged financial support package.Just In: “Option 2: provide a staged financial support package with an immediate $20 million loan.”
SupportedThe paper estimated closure could affect the state economy by $500 million a year if the smelter failed to reopen.Just In: “the paper estimating its closure could impact the state economy by $500 million a year if it failed to reopen.”
SupportedFelix Ellis said the documents showed the advice was that the consequences of doing nothing were greater.Just In: “"We understood the risks were present, but the released documents show the advice was that the consequences of doing nothing were greater," he said in a statement.”
SupportedThe smelter closed in July and more than 200 jobs were lost.Just In: “The Liberty Bell Bay manganese smelter, in Tasmania's north, closed in July this year and was subsequently liquidated, resulting in the loss of more than 200 jobs.”
SupportedEY Parthenon believed the company had been insolvent from as early as May 1, 2025.Just In: “The smelter's administrator EY Parthenon said it believed the company had been insolvent from as early as May 1, 2025.”
SupportedLiberty Bell Bay’s directors signed a solvency declaration in August 2025 before the loan was executed.Just In: “But Liberty Bell Bay's directors signed a declaration to the Tasmanian government in August that year stating it was solvent.”