Peter Malinauskas (left) and Anthony Albanese announce the package to Whyalla steel workers. Photo: Peter Malinauskas/Twitter (X)
The federal and South Australian governments have announced a $2.4 billion rescue package for Whyalla Steelworks a day after it was put into administration.
Prime Minister Anthony Albanese, SA Premier Peter Malinauskas and Federal Minister for Industry and Science Ed Husic announced the package in Whyalla today (February 20).
There are 1100 workers at the steelworks with more than 2000 workers indirectly.
KordMentha was appointed administrator by the SA Government.
The plant is considered critical to sovereign Australian steel production as it is only one of two domestic steelworks; it produces 75 per cent of Australian structural steel and is the only domestic producer of ‘long steel’ products.
The leaders say the funding will be delivered in three parts: immediate on the ground support, stabilising the steelworks and future investment.
The immediate support of $100 million will go towards creditor payments ($50m), infrastructure upgrades ($32.6m) and a jobs skills hub ($6m).
Stabilising the Steelworks will cost $384m in joint funding while the steelworks is in administration to ensure workers and contractors are paid.
Future investment will total $1.9 billion and involve building new infrastructure as part of a new Green Iron fund to boost green iron manufacturing and supply chains.
The leaders say a joint taskforce will be set up to advise on the switch with the Commonwealth earmarking up to $500m of the Green Iron funding for the steelworks.
“My government is building Australia’s future and to do that, we need Whyalla steel,” Albanese says.
SA Premier Peter Malinauskas says the steel is “vital” to his state’s, and Australia’s, future.
“I was never going to allow a taxpayer funded bail-out of (owners) GFG (Alliance),” he says.
Husic says that Australian steelmaking is here to stay.
“Steelmaking has provided spine to Australian industry for a century and it’s here to stay,” he says.
Malinauskas says they had lost confidence in GFG’s ability to pay its bills as well as in its ability to secure more funding.
SA Minister for Energy and Mining Tom Koutsantonis says the crisis was of GFG’s doing.
“GFG reaped significant profits from their facilities here but despite long-made promises it failed to invest back into the steelworks,” he says.
The minister says that since 2017-18, GFG ‘s iron ore sales were worth $7.825 billion from the plant while 2019-20, steel sales totalled $4.8 billion.
Koutsantonis also criticised GFG owner Sanjeev Gupta for using Whyalla revenue to service overseas debts and purchases.
“In the same period, we saw nearly $800m sent offshore including repayments arising from the Greensill collapse, payments of intercompany loans within the GFG group and funding towards the purchase of the Liberty South Korea business,” Koutsantonis says.
“This is not a Whyalla problem – it is a GFG problem. Now GFG finds itself in a position where its creditors are not being paid.”
UNIONS REACT
The Australian Workers’ Union (AWU), Australian Manufacturing Workers’ Union (AMWU), Electrical Trades Union (ETU) and Maritime Union of Australia (MUA) all welcomed the package.
AWU National Secretary Paul Farrow says: “This announcement shows what real political leadership looks like: turning a challenging situation into a huge shot in the arm for Australia’s sovereign capability.”
AMWU National Secretary Steve Murphy says the works can now feel hope.
“For eight years workers watched the mines, plant and machines being run down and neglected with essential spare parts not available as bills haven’t been paid.
ETU National Secretary Michael Wright says the decision gives workers a shot at a secure future.
MUA National Secretary Paddy Crumlin the steelworks relied on maritime supply chains for almost 100 years.
“We cannot emphasise enough at this time of great international uncertainty and environmental challenge … that the retention of sovereign capacity in sectors such as steel manufacturing and Australian coastal shipping is essential for the national interest.”
STRATEGIC DANGER
A new report by the South Australian branch of McKell Institute says collapse of the steelworks will make Australia dangerously reliant on Chinese steel imports.
The institute’s CEO, Ed Cavanough says Whyalla ‘long steel’ is “even more crucial as Australia confronts burgeoning public infrastructure projects and a housing crisis and aspires towards a manufacturing resurgence”.
“If Whyalla steel fails, Australia would become dependent on imports for long steel,” he says.
“That would leave us completely exposed to coercion from strategic adversaries. We had a taste of what this looks like in 2021 when the Chinese Government imposed tariffs and trade restrictions on key Australian export sectors.”
He also says Australia’s defence capacity and national security depends on the steelworks.
“The crucial fact is that the Whyalla steelworks are far too important to the national interest to be left to the whims of a very capricious private owner,” he says.
