Industry Minister meets Posco to discuss Whyalla future, possible bid

PERTH (miningweekly.com) – South Korean steel major Posco has emerged as a viable buyer for the steelworks division of the now defunct Arrium.

Federal Industry Minister Greg Hunt on Thursday revealed that Posco had expressed a “strong desire” to buy the Whyalla steelworks, which were placed on administration earlier this year.

“I met with Posco in South Korea and was joined by South Australian Treasurer Tom Koutsantonis and National Secretary of the Australian Workers Union, Scott McDine.

“We stood together and made it clear that we are determined to work with any potential buyer for the steelworks to support the workers of Arrium and the Port Pirie community,” Hunt said on Thursday.

“Posco briefed me on their future vision for Whyalla – where the plant not only continues current operations, but grows significantly. They don’t want Arrium to just be competitive domestically. They want Arrium to be globally competitive.”

Hunt said Posco’s plans included expanding overall production at Whyalla by 50%, which would significantly boost steel output and would result in the creation of a new 220 MW power plant, which would meet Arrium’s own power requirements and assist in providing electricity supply and security for the state.

“You couldn’t get a better outcome for South Australia – not just protecting the jobs but investing, expanding production and providing additional baseload grid security,” Hunt said.

Koutsantonis for his part said that the state government had made clear to Posco that it stood ready to invest some A$50-million into the Whyalla operations, to make them more viable over the long term.

“While the bid process is still a long way from completion it was clear from the meeting today that Posco has a serious interest in Arrium and the long-term future of the Whyalla operations, the local workforce and the Whyalla community as a whole.

“Of particular interest is their world-leading manufacturing technology Finex, which produces steel identical in quality to steel from blast furnaces but with fewer input materials and less impact on the environment, and which could potentially be implemented in Whyalla.”

Koutsantonis noted that the state government was also hoping to meet with other potential buyers over the coming months.

However, Posco has denied interest in the Arrium assets, saying in a statement to Reuters that it was trying to sell the group the FINEXT technology.

“Posco is not participating in bidding to buy Arrium. We are interested in selling our FINEXT technology to Arrium,” a spokesperson was quoted as saying.

Arrium, which appointed the administrator in April, has steelmaking capacity of about 2.5-million metric tons a year. Operations include the Whyalla steelworks and port, the OneSteel steel manufacturing, distribution and recycling unit and an iron-ore mining division

Marketing efforts for the Arrium Australia business started in August this year, with administrators favouring offers that allow for the sale of the business in one line as a going concern, with a view to maximise value to credit holders.

Shortlisted bidders are expected to submit final binding offers in December.