Tasmania channels King Island mine share gains into regional recovery fund

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Tasmania regional recovery fund

Highlights

Tasmania will finance its new Recovery Fund for Regional Resilience from equity gains in Group 6 Metals' Dolphin tungsten mine, following the conversion of a A$10 million loan into a 12% shareholding.
The Dolphin mine, holding Australia's largest tungsten deposit, reopened in 2023 due to government support and strong tungsten price gains, alongside an additional A$7.5 million state loan.
The Recovery Fund will support regional economic diversification and debt reduction, aiming to pre-empt industry shocks as state debt is projected to approach A$10 billion by decade's end.

Fund backed by tungsten investment gains

As reported by ABC News, the Tasmanian government says the new Recovery Fund for Regional Resilience will be financed from its investment in the Dolphin tungsten mine on King Island. The state acquired a 12 per cent shareholding after a A$10 million loan made to the project in 2023 was converted into equity when the owner could not repay the debt.

The mine, owned by Australian company Group 6 Metals, holds what the article describes as the country's largest tungsten deposit. Dolphin had been shut for more than two decades because of low tungsten prices, but it reopened in 2023 with support from the government loan and has since benefited from a sharp rise in tungsten prices.

Tungsten is classified as a critical mineral used in heavy machinery and defence manufacturing. Tasmania also lent the mine a further A$7.5 million last year, adding to its financial exposure to the project as it returned to operations.

Premier Jeremy Rockliff says the investment has created scope to reinvest part of the windfall into the regions that helped generate it. He says the fund is intended to turn a one-off financial return into a lasting asset for regional Tasmania.

Support aimed at industry shocks and debt reduction

The new fund is designed to help communities manage major economic disruption, including industry change, employer closures, workforce impacts and other shocks. The policy comes after the government intervened to support King Island Dairy, Bell Bay Aluminium and Nyrstar, while also responding to the loss of more than 200 jobs following the closure of Liberty Bell Bay, described as Australia's last manganese smelter.

Rockliff says the goal is to act before regional economies face severe damage, rather than responding only after a major employer shuts down. The government says the fund will support economic diversification, workforce transition, efforts to attract investment and community-led recovery initiatives.

Part of the proceeds from the mine investment will also be directed to reducing Tasmania's debt burden. State debt is estimated to peak at just under A$10 billion by the end of the decade.

Our earlier report on Europe’s gas storage outlook and soaring prices explained that inventories were set to enter winter well below average after disruptions around the Strait of Hormuz tightened LNG flows. We noted that the jump in wholesale energy costs was already feeding into higher household bills and raising competitiveness concerns for industry, keeping pressure on governments to step in with support measures.

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