South Australia throws A$50m lifeline to Whyalla

JOHANNESBURG (miningweekly.com) – The South Australian government on Thursday committed A$50-million to support the new owner of the loss-making Whyalla steelworks, which is up for sale after mining and steel group Arrium entered into administration earlier this year.

Premier Jay Weatherhill had also asked the leaders of both major parties to contribute A$100-million towards a funding facility, which meant that the total funding available to the new purchaser would be A$150-million.

“Given the national importance of this industry, we expect a commitment from Mr Shorten and Mr Turnbull to back the proposed joint state-commonwealth funding assistance package,” he said in a statement.

Weatherhill said that Whyalla was “critical to South Australia and to the nation as a whole – it is essential that we retain our sovereign steelmaking capability”.

Analysis by Flinders University showed that South Australia would lose about A$750-million and 5 000 jobs if the Whyalla operation was closed.

The funding facility would allow the new owner to implement technological efficiencies and upgrades at the Whyalla operations.

“Choosing winners in terms of what types of technological upgrades to back is not an option, because each potential future buyer has different requirements. This funding facility proposal provides flexibility to potential future buyers while at the same time ensuring that the money stays in Whyalla to support the continued operation of the plant,” said South Australian Treasurer Tom Koutsantonis.

To support Arrium suppliers, the $10-million Whyalla Small Business Loan Scheme was launched last month to assist small businesses experiencing cash-flow challenges as a result of Arrium entering administration. Under the scheme, interest-free loans of up to $750 000 were available to South Australian businesses that supplied Arrium.

As of Wednesday afternoon, 13 formal applications for assistance had been received and a further nine companies were in the process of applying.

Seven loans totalling nearly $3-million had been approved with many others very close to finalisation.

Arrium’s administrator last month said that the recapitalisation and sale of the group would be largely completed by the end of the year. The group's most profitable business was its mining supplies unit, Moly-Cop, which would also be sold.