SA Premier Concerned About Whyalla Steelworks

Topic: Steel

The Whyalla steelworks went into administration over a year ago.

In short:

South Australia's Premier, Peter Malinauskas, is concerned about the Whyalla steelworks' blast furnace.

He says there is a potential for job losses at the steelworks.

What's next?

The CEO of a bidder for the operations says money and gas will be needed to make the steelworks viable.

Whyalla steelworkers are struggling to get the city's vital blast furnace back producing iron.

The blast furnace has been offline since early last month.

SA Premier Peter Malinauskas said he is very concerned about the ongoing shutdown.

The blast furnace faced similar shutdowns in the years before the state government put the previous owner GFG Alliance into administration.

SA Premier Peter Malinauskas expresses his concerns about the blast furnace.

The blast furnace in Whyalla is a very old piece of kit that has been run down and not well cared for.

There has been a period of strong production, mainly on the back of the extraordinary work of the steel workforce.

But as we've seen maintenance required to other parts of the operations of the steel workers, we've had to bring the blast furnace down and bring it back up again.

When asked about the potential impact of the blast furnace shutdown on the workforce, Mr Malinauskas said: 'Everyone's got their job at the steelworks and that's what we're working to maintain.'

The blast furnace at the Whyalla steelworks is 'not going through a good period', the SA premier says.

But he then repeated a comment he made a week ago about possible 'pain' before gain at the steelworks, conceding that could mean potential job losses.

The premier said the blast furnace was close to the end of its working life and would be replaced by an electric arc furnace when a new buyer for the steelworks was found.

Bidder raises concerns

There are currently five bidders who have been shortlisted to take on the steelworks and associated mines and port.

Among the bidders is Australia's biggest steel maker, BlueScope, which is leading a consortium of global steel makers to take on the embattled business.

Whyalla is about a four-hour drive from Adelaide.

The federal and SA government have put a $2.4 billion rescue package together in the hope of delivering a future for the business and the city of Whyalla by September this year.

But BlueScope CEO Tania Archibald told a business gathering in Melbourne recently that the purchase will 'ultimately need to make commercial sense for shareholders' and raised potential obstacles to a successful sale.

The grand ambition is to see that high quality mining resource developed and the establishment of DRI production.

Tania Archibald took over running BlueScope six months ago.

Ms Archibald said that a massive amount of cheap gas would also be required.

You could expect a 15 to 20 million gigajoules per annum requirement at Whyalla.

There have been some good developments recently on potential gas supply to Whyalla — but the most critical of all is the gas price — which must be competitive.

Because what you're still competing with is the subsidised marginal blast furnace producers from China and the very low-cost gas DRI hubs in the Middle East.

Negotiations are continuing into a package to support the future of the Port Pirie lead smelter, across the Spencer Gulf from Whyalla.

Ms Archibald also said there was still a 'long way to go' before any decision would be made on the Whyalla steelworks.

I truly hope for the sake of the community in Whyalla and South Australia that the right path can be navigated to move it forward.

We'll continue to engage in that process with our international consortium partners and both the South Australian and federal governments but ultimately it has to make commercial sense for shareholders.

Gas reserve certainty

In a statement, South Australian Mining and Energy Minister Tom Koutsantonis said the state government 'has long understood that the supply of reliable and competitively-priced gas is essential to the transformation of steelmaking at Whyalla'.

That is precisely why the South Australian government recently secured key terms with Santos to create the South Australian Strategic Gas Reserve.

Under the agreement, Santos will supply 20 petajoules of gas at a competitive long-term price each year for 10 years from 2030.

This gas will underpin Whyalla's future, enabling the transition to lower carbon steelmaking and giving potential buyers certainty of supply as the sale process proceeds.

Sanjeev Gupta bought the Whyalla steelworks in 2017.

As well as GFG Alliance, billionaire Sanjeev Gupta owns InfraBuild, which buys steel from Whyalla to be processed interstate.

InfraBuild has informed customers that the unexpected interruption to steel production at Whyalla steelworks is likely to disrupt supply of some products.

InfraBuild has moved swiftly to minimise the impact, including by increasing production at our Laverton and Rooty Hill steel mills.

Billet is being sourced from alternative suppliers at short notice, with higher pricing reflecting both the urgency and current Middle East supply chain pressures.

We are working closely with our customers and doing everything possible to manage demand, maintain continuity and minimise the impact on their operations.

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