Iron oxidisation or rust is due to elevated moisture levels, this can occur for a number of reasons but the most common cause is from water ingress via the flue system. The extent of the rusting on the cylinder is not sufficient for it to cause any issue if it is stopped now, so the cylinder should be wire brushed off and treated with some rust stopper and then painted with some zinc galv type aerosol product if possible.
To ensure this is stopped from recurring an investigation into the cause of the water ingress should be conducted, it is usually either through the cowl and top casing assembly or through the flashing detail, if there is no evidence of any water ingress on the ceiling tile area or the outside of the flue pipes then it would suggest the top casing area.
Due to the result of climate change and the increased occurrence of high rainfall events in NZ we have recently introduced an all-weather butterfly that can be inserted into the cowl to help assist in reducing the effects of these very high rainfall events, this is available on our website under part P843.