The future of Tasmania's Liberty Bell Bay, formerly owned by UK billionaire Sanjeev Gupta's GFG Alliance, had been under a cloud since it stopped production in mid-2025.
It was placed into administration in March, with hopes of a successful sale taking a dive in June when a key member of a buying consortium pulled out.
The smelter's administrator announced on Thursday it had stopped pursuing a sale and would order its immediate closure.
"It's a very sad day, the end of an area," local mayor Greg Kieser said.
"We are a resilient community, this is a low point but we will move on for the betterment of the state, the north and the George Town community."
The smelter, about 50km north of Launceston, was established in 1960 and produces critical ferroalloys for steel manufacturing.
Administrator EY said it ordered the closure following troubles with enabling arrangements including operating requirements.
The difficulties were partly driven by broader economic challenges associated with operating the smelter in a volatile global economy, EY said.
The state government has poured $150 million over a decade into supporting the smelter's operations and put an extra $20 million on the table in a last-ditch effort on Wednesday night.
It also provided power concessions and, with the federal government, jointly supported employee wages through the administration process at a $10 million cost.
"It has been an icon for industry in this community for decades and decades. It has been through some tough times, particularly in the last 10 years," Premier Jeremy Rockliff said.
"Where we are is absolutely no fault of the employees or management of the facility who I know have worked so very hard."
Liberty Bell Bay was built by BHP before being purchased by Mr Gupta's Liberty Steel Group in 2021.
Mr Gupta has run into trouble elsewhere in Australia - South Australia's Whyalla steelworks was taken out of his company's hands and placed into administration in 2025 because of debts.
It was an incredibly disappointing outcome for employees, their families and the wider Bell Bay community, EY's Morgan Kelly said.
"Over the past several weeks, all parties worked diligently to pursue a transaction that would preserve the smelter and secure ongoing employment," she said.
Bell Bay Advanced Manufacturing Zone chief executive Susie Bower said an employment hub would be created for employees, some of whom had been with the smelter for 40 years.
"We were so hopeful of a positive outcome, that is not to be," she said.
Some of the smelter's 216-strong workforce will be retained in the short-term to demobilise the site, sell remaining assets and meet environmental and regulatory obligations.
Information about redundancies will be communicated to employees on Monday and support was being provided to them, EY said.
A consortium of Adroit Capital, White Oak Global Advisors and OM Holdings was announced in May as Liberty Bell Bay's preferred bidder, before Adroit Capital pulled out.
The Tasmanian government in January loaned GFG Alliance $20 million to buy raw manganese ore in the hope of restarting operations.
It was forced to call receivers to seize and manage the stockpile of ore when operations didn't restart.
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