Administrators call time on Whyalla Steelworks’ coal furnace “delusion,” hundreds of jobs to go

The South Australian government and administrators of the Whyalla Steelworks have abandoned efforts to reboot the plant’s broken-down blast furnace, leaving more than 500 workers out of a job and adding a new degree of difficulty to the planned sale of the beleaguered industrial giant.

Reports say workers at the Whyalla steelworks were informed on Monday morning that the coal-fired blast furnace would be closed permanently, after proving unable to re-start since going offline in April.

The news is a fresh blow to the steelworks, 19 months after the South Australian state government took the extraordinary decision to appoint administrators KordaMentha to the company, effectively seizing control while seeking a new owner to guarantee the steel city’s future.

One day later, prime minister Anthony Albanese pledged $2.4 billion dollars in federal government funds to help ensure the Steelworks’ survival and keep alive the “enormous” opportunity for Australia in green steel manufacturing.

Up to $500 million from the new fund was earmarked for use to immediately support Whyalla, with the potential to make available “substantial additional financing to partner with a future owner and operator to upgrade the facility and ensure a green steel future for Whyalla and South Australia.”

The South Australian government, meanwhile, said it would use funding set aside for the Hydrogen Jobs Plan to prioritise securing the steelworks, as well as $50 million from the Whyalla Steelworks Operational Efficiency Improvements Fund.

At the time, the state government said the original plan to fund a green hydrogen electrolyser and power plant at Whyalla had not been ruled out, but that the current priority was to ensure the survival of the steelworks, as the main offtaker of the proposed green hydrogen projects.

But as news of the huge job losses emerged, critics say that this “dark day” for Whyalla proves there is no case for propping up end of life technology without also accelerating investments in permanent clean-energy based solutions.

“South Australia could be well underway on planning for this, and progressing to a final investment decision and into construction on an EAF as a no-regrets first step,” Climate Energy Finance director Tim Buckley said on Monday.

“Putting bandaids on an antiquated, beyond end-of-life facility degraded for almost a decade under the watch of Sanjeev Gupta’s GFG Alliance has proven to be simply a waste of taxpayer funds, a delusion that kicked the can down the road and deferred making hard and timely decisions in the best interests of the workforce, the community and taxpayers,” Buckley said.

Buckley, alongside other industry observers and analysts, has long argued that the future for Whyalla lies in an electric arc furnace (EAF) using electricity powered by renewables to produce low-emissions “green steel.”

“This leverages the competitive advantage of South Australia’s world leading electricity grid now reliably powered almost entirely by firmed renewable energy,” he said on Monday.

“Expediting the development of a new EAF could and should have been the top priority since the politically brave decision to put the steelworks into administration more than 18 months back, not wasting money to give the community and workforce false hope,” Buckley says. 

“Now is the time to select a private partner or consortium that will drive forward a public-private solution to give certainty to the future of Whyalla and South Australia and invest in modern clean-tech solutions, ideally leveraging, partnering and collaborating with our key Asian steel trade partners.”

Innes Willox, CEO of the Australian Industry Group, says now is the time for the government and prospective buyers to look to the future and make appropriate investments.

“Whyalla’s latest brush with industrial death is another stark reminder to governments and regulators that they must stop making it increasingly difficult for Australian businesses to invest, grow and compete,” Willox said in a statement on Monday.

“Steel making is an essential national capability, but it needs to evolve as new technology and processes put pressure on international competitiveness. This is key to Australia’s economic resilience in what are increasingly uncertain times.

“If the prospective buyer commits to purchasing a new furnace, it provides an opportunity to expand into less carbon-intensive markets.”

For the workers, ABC reports that South Australian premier Peter Malinauskas is expected to reveal further details about the blast furnace closure this afternoon, including potential job offers from other employers, such as BHP.

Last year, when the plant was place in administration, Malinauskas described Whyalla – one of only two Australian steelworks – as critical to sovereign steel. It produces 75% of Australian structural steel and is the only domestic producer of steel long products.

“For months, my government has been carefully planning a strategy to address the challenges unfolding at the Whyalla Steelworks,” the premier said in February 2025.

“Throughout that period, we gave GFG every opportunity to make good on its promises and to bring creditors back into terms. It has failed to do so. So today, we have acted.”

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