Breaking: Australia's only manganese smelter to close immediately

The administrators of Australia's last manganese smelter say they have ordered the immediate closure of the business.

The Liberty Bell Bay smelter in northern Tasmania was placed into administration in March this year, but in May, administrators announced it had entered into an agreement with a consortium to acquire the business.

One of its main financial backers pulled out last month, leaving the sale in doubt.

It ultimately fell through this week.

In a statement on Thursday morning, its administrators EY Parthenon said the consortium informed them on Tuesday that they had ceased pursuing the sale transaction.

"In the absence of both a commercially viable transaction, and the funding required to continue operations, the Administrators have made the difficult decision to commence the orderly closure of the business with immediate effect,"

it said.

"These difficulties were, in part, driven by the broader economic challenges associated with operating the smelter in a volatile global economy."

EY said the employees were informed on Wednesday morning, and would be updated about redundancies next week.

"Employees are being provided with all support available during this difficult period," the statement said.

"In the short term, the Company will retain a small workforce to safely demobilise the site, realise the sale of remaining assets and meet its environmental and regulatory obligations."

A 'sad day' for local communities

The Tasmanian and federal governments described it as a "sad day" for the northern Tasmanian communities that rely on the 200 jobs at the smelter.

In a joint statement, Premier Jeremy Rockliff and federal Industry Minister Tim Ayres said their focus was on the workers.

"This is deeply difficult news for the workers of Liberty Bell Bay and the communities of Bell Bay, George Town and northern Tasmania who have fought tirelessly for a better outcome," the statement said.

"Both the Commonwealth and Tasmanian governments are now focused on ensuring workers and their families are supported during this time, with immediate on-ground support now available."

Embattled smelter faced months of uncertainty

It's been a long period of uncertainty for workers at the smelter.

Its previous owner, GFG Alliance, placed it in limited operations in May last year, blaming a lack of ore supply.

The Tasmanian government provided the company with a $20 million loan to purchase ore, which was delivered in October but not used.

As GFG's financial issues worsened, Liberty Bell Bay was placed into voluntary administration in March.

State and federal governments contributed $9.6 million to ensure workers continued to be paid while EY Parthenon searched for a buyer.

EY announced a preferred bidder in May, which included Perth-based Adroit Capital and US private equity firm White Oak.

Adroit pulled out last month, putting the sale in serious doubt, and it has now fallen through.