Hi Geoff. I don't believe the much cited 'humidity' was a factor at all. The commercial reality was that the pistol/shotgun powders were the only double base (nitro glycerine together with nitrocellulose) powders made by ADI.
The primary customers were originally the ADF for 9mm and Hodgdon for AP30 (Clays), AP50 (International), AP70 (Universal). The new facility was all about digital sampling and control systems. Around the same time they had the idea to move to new formulas, the APS range. This lost them the Hodgdon contract, as the APS powders insufficiently similar to the previous powders that Hodgdon's US customers demanded. As for ADF 9mm, ADI entered a contract with Olin for the 9mm to be made in the US and shipped to ADI for sale to the ADF.
The Australian commercial market isn't large enough (approx 2 tonnes per year) to justify the continued operation of the nitro glycerine plant (which itself was old and needing replacement), and so the whole production facility was mothballed.
If the Defence puts in a requirement for double base powders for any of their munitions, then the whole issue may get reassessed.