The South Australian Government has set aside another $384 million in the next financial year to keep the Whyalla Steelworks operational. The extra money has been allocated on the basis that the federal government will cover half the cost, according to budget papers. In February, when the steelworks went into administration, the federal and state governments announced they would spend $384 million – split 50/50 – to cover the costs of running the steelworks while it was prepared for sale. “We said from the outset that the first tranche of administration funding wouldn’t be the last,” said South Australia´s Premier, Peter Malinauskas, on June 6.  He added that the government anticipates there is at least another 12 months to run in the administration process. The initial $384 million was part of an overall $2.4 billion package announced by the state and federal governments to support the steelworks. The state’s planned contribution to that package was $650 million, according to the budget papers. Mr Malinauskas expressed confidence in the administration process, saying the level of interest in the steelworks from both domestic and foreign companies is “higher than what we anticipated”. The administrator, KordaMentha, has previously said that as many as 12 companies are interested in buying the asset.

The additional funding announcement was followed by news that GFG Alliance had placed one of its subsidiaries, Whyalla Ports Pty Ltd, into voluntary administration. Australian Steel News readers will recall that Whyalla Ports Pty Ltd had operated the port of Whyalla for several years under the belief that it was doing so legally. However, the South Australian state government intervened in May to clarify that the lease to the port facility is in fact owned by OneSteel Manufacturing, the GFG subsidiary which used to operate the steelworks and which is now in administration. GFG Alliance has said the withdrawal of the lease from Whyalla Ports Pty Ltd had resulted in a complete halt to all revenue streams, leaving it with no ability to pay creditors. KordaMentha has continued to operate the port throughout the ownership dispute, while the state government has said GFG’s decision has no impact on the facility’s operation.

Troubles continue elsewhere for GFG Alliance, owned by the British businessman, Sanjeev Gupta. In Tasmania, Mr Gupta’s Liberty Bell Bay manganese smelter is scheduled to shut down for at least four weeks from the middle of this month. Most of the 250 workers won’t be required and are expected to use their leave entitlements. The smelter has been in a `limited operations´ phase since mid-May. Liberty Bell Bay produces ferro manganese and silicomanganese, two ferro alloys common in steel production, and has a liquid steel capacity of more than six million metric tonnes per annum. The plant has been operating since 1960 and owned by GFG Alliance since 2021. “Due to ongoing challenges with ore supply, Liberty Bell Bay has no option but to enter a period of limited operations,” a spokesperson told the ABC. The company lost its main ore supplier last year when Tropical Cyclone Megan caused extensive damage to South32´s Groote Eylandt Mining Company. Meanwhile, in NSW the Tahmoor coal mine, also owned by GFG Alliance, remains idle. The high-grade coal produced at Tahmoor is widely used at the Port Kembla steelworks. A financing issue, which saw about 560 workers stood down with pay in February, remains unresolved. The NSW Government is owed royalty payments and the mine is in arrears with its water bills. A spokesperson for GFG Alliance said the process of finding funding had taken longer than expected but the company was hopeful it would be completed soon.

The controversy over an influx of cheap, fabricated steel imports adversely impacting the livelihoods of Australian fabricators has taken a twist. “The main thing that makes imported pre-fab cheaper is the local cost of HDG, which is the most expensive in the world here; and which for the most part is foreign owned,” a reader has told Australian Steel News (ASN). “What hope has the fabricator got if the price of HDG is more expensive than the steel?” he added. The reader in question has worked for many years in executive roles at some of the Australian steel industry´s best known companies. He still works in the industry but asked not to be identified in case his opinions prejudiced his business.

“I would like your publication to shine a light on how fabricators paying upwards of $2000/t for HDG can compete with any overseas production as that cost of HDG is more than six times what is paid by the majority of other countries around the world,” he told ASN. “Almost all infrastructure projects are HDG, and the galvanisers are foreign owned. Why should the Australian taxpayer be paying all this extra money for HDG which is in turn putting the local fabricator out of work? This is the real issue,” he declared. The reader said the government should be looking at the coating costs, because that is where the margin of the fabricator has gone, not to offshore processing.

He went on: “The result of any further duties on steel products, both raw or pre-fabricated, will only result in allocations (from both local mills and in turn fabricators to end users), extended lead times and another price cycle. None of this is good for the country as a whole with the current cost of living crisis. We should not be inviting the government further into the industry, as it never makes changes for the better,” he said. “We should not be putting duties on imports, we should be subsidising local manufacturing with tax breaks. If the cost of producing goods goes up here as a result of no import competition, then the government will have to tax business more to afford the infrastructure bills. It is a vicious circle”.

Finally, just a reminder: on June 26, the Australian Steel Association will host an event in Sydney where the guest speaker will be Owen Birrell, one of Australia’s sharpest minds on steel, commodities and navigating uncertainty in today’s fragile global economy. Check out the ASA website for full details.