Australia’s critically important Whyalla steelworks are on the verge of collapse, with tens of millions of dollars owed to creditors and up to 1,000 jobs on the line without government help.
The South Australian government on Wednesday announced OneSteel Manufacturing would be put into administration, following the passage of emergency legislation to override controversial British billionaire Sanjeev Gupta.
KordaMentha have been appointed as administrators of OneSteel, ensuring Mr Gupta’s GFG group no longer ran one of Australia’s two steelmakers.
New laws now enable the SA government to act on the debts owed by the GFG Alliance, which had owned Australia’s only plant that produced long steel used in railways, high-rise buildings and wind farms, and made 75 per cent of Australia’s structural steel.
Premier Peter Malinauskas said the GFC group had failed to repay creditors, giving his state government little choice but to act.
‘For months, my government has been carefully planning a strategy to address the challenges unfolding at the Whyalla Steelworks,’ he said.
‘Throughout that period, we gave GFG every opportunity to make good on its promises and to bring creditors back into terms.
‘It has failed to do so. So today, we have acted.’
The troubled steelworks is a big employer in Whyalla, a town northwest of Adelaide with a population of 22,000 people.
The plant’s future hangs in the balance, with Premier Peter Malinauskas due to give a press conference on Wednesday afternoon
The South Australian government has announced OneSteel Manufacturing will be put into administration (pictured is Premier Peter Malinauskas)
It has operated at a loss for months and the SA government had grown increasingly concerned about the GFG Alliance being unable to repay its debts.
Mr Gupta, took over the steelworks in 2017 with promises to turn it into a ‘green steel’ plant but its ageing coal-fired blast furnaces have instead broken down.
Whyalla makes the only steel used in railways in Australia along with steel beams used in high-rise buildings.
‘Whyalla is critical to sovereign Australian steel,’ Mr Malinauskas said.
‘It’s one of only two Australian steelworks, produces 75 per cent of Australian structural steel and it’s the only domestic producer of steel long products.’
The Australian Strategic Policy Institutes regards its possible demise as a national security concern.
Whyalla steel has been used to build Optus Stadium in Perth, the Western Sydney Airport terminal and rail link, and Brisbane’s Cross River Rail project.
The latest development is occurring only a week after American President Donald Trump announced 25 per cent tariffs would apply to steel and aluminium exported to the United States, with no exemption yet for Australia.
State parliament passed legislation to override British controversial billionaire Sanjeev Gupta’s control of the steelworks
Without Whyalla steel, Australia would need to import steel during a national housing crisis.
Mr Malinauskas visited Whyalla on Wednesday to work out a funding package to keep the steelworks operational during administration, where the company trades until a new buyer is found.
‘Importantly, it’s not just the steelworks itself – it’s a vast number of local suppliers, small businesses owned and operated by South Australians, whose debts remain unpaid, whose revenue has evaporated, and whose livelihoods are at stake,’ he said.
‘Only an intervention of this nature will protect the steelworks and its creditors.’
The Labor Premier promised Whyalla steel workers would continue to get paid.
‘During the administration workers and contractors will continue to do their job and will be paid with the benefit of a government guarantee,’ he said.
The appointment of an administrator occurred after state lawmakers on Wednesday morning voted to amend the Whyalla Steel Works Act 1958.
Whyalla is one of Australia’s only steel producers, along with BlueScope at Port Kembla in Wollongong.
