Steelmaking Resumes At Whyalla – For Now
GFG Alliance, the parent company of the Whyalla steelworks, has announced steelmaking resumed at the plant on January 5. GFG´s global chief manufacturing officer, Theuns Victor, said bringing the four-month shutdown of the blast furnace to an end had been a huge challenge. “However, I want to caution that we still have a long way to go before the plant is stable and secure. The blast furnace is currently running at half its capacity with a number of issues yet to be resolved. At the same time, we are also tackling challenges in the rest of the plant and will soon enter the EPIC Energy natural gas lateral shut down for 2-3 weeks which will add further complexity to the operations,” he said. GFG Alliance chairman, Sanjeev Gupta, said steel plants of this vintage don´t do well being shut down over an extended period, and he commended Mr Victor´s team. As he has frequently done, Mr Gupta characterised the problems at Whyalla as being symptomatic of wider issues in the global steel industry. In a company podcast he said 2024 had been a `perfect storm´ in every respect. “While demand was down at the same time we had an excess supply in countries like China, so there was stress in the steel business globally.
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Almost every blast furnace I know of in the world was losing money and had a tough time, and we were definitely no exception,” he said. “On top of that we had production problems, so last year we produced less than 25% of our capacity – about 250,000 tonnes – compared to a capacity of over 1 million tonnes, which meant we lost a lot of money,” he added. However, the Australian Workers Union (AWU), Whyalla branch organiser, Shane Karger, believes the blast furnace shutdown was a consequence of an attempt to save money. “There were decisions made by the company to vary the output of the furnace to try and reduce the amount of loss-making steel that was being made. Unfortunately, that plan didn’t obviously work out how they wanted it to,” he told the ABC´s 7.30 Report recently.
Notwithstanding the somewhat fragile nature of the plant´s return to steelmaking, in the podcast Mr Gupta expressed optimism about the steelworks´ future and that of his overall Australian operations. “There’s things which will help us: the drop in raw material prices will help… we have new strategies on how to rebalance our production portfolio across the country… we have new plans on how to address some of the markets which are currently being competed on from imports,” he said. “Interest rates are already dropping in many places which will help housing… last year was a massive election year across the world… that is now coming to an end, things will settle down in the US and various other places and, as that happens, we’ll find some stability and we’ll find a new world order,” he added. The South Australian Premier, Peter Malinauskas, told the ABC he has heard many promises from Mr Gupta over recent years. “We would love to see those promises and those big investments in capital be realised because that would be a good thing for the country, and we just want to see that come to fruition,” he said. Meanwhile, the AWU´s Mr Karger has urged state and federal governments to keep their focus on saving the embattled steelworks. “We are close to being on the brink of losing our steel-manufacturing industry in Australia for structural and rail steel,” he told the 7.30 Report.
In the GFG Alliance statement Mr Gupta said: “I want to thank all stakeholders who have been supportive of our mission, especially customers, vendors and suppliers who are bearing with us on this journey.” Since that statement the Australian Financial Review has reported that, according to CreditorWatch which monitors credit scores and defaults, five more industrial companies supplying products to the Whyalla steelworks have lodged fresh notices of unpaid bills totalling a combined $650,000. Last year almost 50 jobs were lost at the steelworks, while Australia´s largest rail freight operator Aurizon suspended some services because of unpaid debts.
State MP Eddie Hughes told ABC Radio Adelaide that he´s pleased the blast furnace is operational once more; however the good news is being viewed with caution. “It’s been, to put it mildly, a very hard slog for the workers at Whyalla, especially those workers at the blast furnace floor. People have their fingers crossed. We built up to getting it operational in the past, only to have setbacks,” he said. Referring to the fact the blast furnace is not at full production, he added: “The amount of steel being produced will be obviously significantly less than what the plant’s capacity is. We want to see the blast furnace run at capacity, or near capacity.”
On the GFG podcast Mr Gupta admitted that “we need to stop losing money” as he reiterated his long-term commitment to the Whyalla project. However, he also said: “No matter how strong a company is, no matter how strong a balance sheet is, you cannot keep losing money at the rate we’ve been losing it.” By logical extension of that statement, if the losses can´t be suitably stemmed, surely there must come a “time to walk away” moment when the idea of throwing further good money after bad becomes unpalatable.