A few days ago it was announced that the federal government would be providing a $150 million loan guarantee to enable the Port Pirie lead smelter in South Australia to undertake a major upgrade. This will enable the smelter to extract a greater range of valuable trace metals and critically, reduce the level of its lead air emissions.
So what the hell has this got to do with Climate Spectator – a publication focussed on climate change and energy issues?
A lot based on my experience. In many ways it represents a parable of the tragedy unfolding with how we are approaching the problem of global warming.
Back in 2001 I worked for a major Australian insolvency firm called Ferrier Hodgson, engaged in the voluntary administration of a large lead and zinc producer called Pasminco, the owner of the Port Pirie smelter at the time (it has since morphed into Nyrstar).
Pasminco had fallen into serious financial trouble, and the banks had effectively taken possession of the business, with Ferrier Hodgson charged with recovering the banks’ money. The plan was to refloat the company on the stock exchange selling it in stages.
But before we could float it on the stock exchange we first set about cleaning it up. This is just like when you sell a house you probably attend to a range of repairs that you’d previously just lived with, and maybe even some renovations to make the house more appealing to buyers. With Pasminco it had some really profitable, attractive assets, and some pretty ugly, neglected and unprofitable ones. It also had some absolutely horrific liabilities – primarily a range of sites that had been polluted with a range of incredibly toxic materials over decades.
As part of this process we invited a range of merchant banks to make proposals to assist us in the sale process, much like a real estate agent. This was an incredible eye opener for me as these bankers came in to deliver their pitches. In the space of about 40 minutes each bank would inform us that there were a range of smelters and mines that should be closed.
My jaw dropped as I heard this, because the assets they were proposing to close were often the very lifeblood of towns, employing the bulk of the population. By the time the merchant banks had finished their pitch they had effectively proposed wiping out several towns, and I recall one at least suggesting Port Pirie be evaluated for closure.
In addition to this we had swarms of lawyers assisting us. One day the lead legal partner gave the management team a presentation on our legal issues and options as we sat around a boardroom table high above Melbourne.
One of the issues was that the Port Pirie smelter had, over many decades, coated large parts of the town in traces of lead.
When lead is ingested by children under 5, even in very small dosages, it acts to hinder brain development, leading to reduced levels of IQ and higher incidence of attention deficit hyperactivity disorder. In 1984 it was found that 98 per cent of young children in Port Pirie had concentrations of lead in their blood at levels considered by medical authorities to be of concern (10 micrograms per tenth of a litre) and likely to harm brain development.
Such levels of lead exposure for adults can also increase the risk of high blood pressure, a key contributor to strokes. While improvements had been made since then, the danger was such that the manager in charge of the smelter had elected to move his own children out of the town.
The lawyer outlined that it was possible for us to hive-off a company from the larger Pasminco group which would carry the legal liability for any damage caused to the residents of Port Pirie from lead pollution, for which a class action had been launched. This would act to quarantine the company we intended to float from any claims for compensation from possible litigants who had suffered from lead pollution. In essence we could do something similar to what James Hardie ended up doing with asbestos sufferers.
The room went silent for a brief period after this option was put to us, pondering its potential to improve the value of the company float. The silence was then abruptly broken by a senior executive of the company slamming his fist into the table, yelling something along the lines of:
‘Over my dead body will I let you guys do this! If you want to do this I might as well walk out now because I will not be a party to this kind of shameful behaviour!’
The thing is, if it wasn’t for that brave and principled executive, I’m pretty confident the room would have decided to hive-off that company.
And a decade on, the smelter continues to emit lead at levels that are likely to induce learning difficulties in a large proportion of young children. While the proportion of children with lead levels above 10 micrograms has dropped to 25 per cent, the smelter has fallen well short of an EPA target to get it below 5 per cent by 2010.
Yet in spite of the serious harm the smelter has been causing to large number of children in the town, state and local government politicians, no doubt responding to desires of the local community, have been desperate to keep the smelter operating. According to the Port Pirie mayor, if the smelter closes, so does the town. This concern for jobs meant government officials over around a decade chose to focus on cleaning up lead from the surrounding area, without dealing with the ultimate source – the smelter.
The SA EPA finally faced up to reality earlier this year insisting that the smelter reduce its level of air emissions. This precipitated the announcement this week of a government subsidised upgrade.
Port Pirie is a town that, in its desperation to maintain jobs, allowed a business to undermine the future prospects of its own children. This is understandable because the effects of lead on children are not immediately obvious. It takes time and the collection of large numbers of observations before health officials could confidently link low levels of lead with a range of learning defects. This makes it easy to pretend that there isn’t really much of a problem, and to blame other, less inconvenient factors, even when scientific researchers tell you otherwise.
In the end the SA government wasted 20 years dabbling in stop-gap measures that ultimately proved insufficient to solve the problem. And the thing is financiers would have sold out that town in a second.
Will we ever learn?
CORRECTION December 10.
An prior version of this article stated that lead concentration in blood was considered a concern by medical authorities at levels above 10 micrograms per ten litres of blood. This has been corrected to 10 micrograms per a tenth of a litre of blood.