Key Takeaways
- Prime Minister Anthony Albanese announced a $2.4 billion federal bailout package to support the Whyalla Steelworks and promote green steel manufacturing.
- The South Australian government is prioritizing the steelworks' survival while intending to use funds previously allocated for green hydrogen projects.
- The bailout plan includes immediate funding to keep the steelworks operational, securing jobs, and long-term investments to modernize the facility for sustainable production.
Prime minister Anthony Albanese has pledged $2.4 billion dollars in federal government funds to help ensure the survival of South Australia’s Whyalla Steelworks and, with it, keep alive an “enormous” opportunity for Australia in green steel manufacturing.
Albanese announced the huge bailout package on Thursday, one day after the South Australian Labor government effectively seized control of the privately owned Whyalla Steelworks and placed it into administration.
At a press conference in Whyalla, appearing alongside federal industry minister Ed Husic, Albanese also announced a new federal Green Iron fund to support early mover green iron projects and unlock private investment at scale.
Up to $500 million from the new fund has been earmarked for use to support Whyalla steelworks, 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, will 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.
A spokesperson for the SA 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.
In radio interviews on Thursday morning, ahead of the trip to Whyalla where more details of the bailout plan will be revealed, Albanese said Australia couldn’t afford to see the steelworks – one of only two in Australia – “just disappear.”
“Producing steel is something that’s a requirement, it’s not like we can just make it disappear. And the potential there as well for green iron in the future is so important and there’s great prospects,” the prime minister told Adelaide radio.
“There’s a real national interest here,” Albanese said in a separate radio interview. “Railways, bridges, schools, hospitals, high rise towers, all of these things – defence assets – depend upon the Whyalla steelworks.
“So, it’s absolutely critical, but as well, the opportunity that is there for green steel manufacturing is enormous and that will be increasingly lucrative as the world seeks to decarbonise.”
Federal Labor says the funding will be delivered in three distinct parts, the first being $100 million for immediate on the ground support, including a $50 million creditor assistance payment.
A second chunk of funding will see the state and federal governments co-investing $384 million to fund the Whyalla Steelworks’ operations during administration, to ensure jobs are retained and workers continue to be paid.
The vast bulk of the money, however, goes to part three of the plan, which is to invest $1.9 billion in the steelworks’ future. Here, the idea is to work with a new owner to invest in upgrades and new infrastructure to ensure a sustainable, long-term future.
The federal show of support follows dramatic scenes in the South Australia state parliament on Wednesday, when premier Peter Malinauskas summoned state MPs to a meeting before announcing that Korda Mentha had been appointed administrator of OneSteel Manufacturing, owned by GFG Alliance.
GFG’s owner, UK billionaire Sanjeev Gupta, said the state was on the “wrong course” in forcing the operation into administration and he was seeking legal advice, according to an internal company memo obtained by The Australian Financial Review.
“This news will be disappointing to us all, not least to me personally, given the huge efforts we have all put in to save Whyalla in 2017 when it was losing $1 million a day, return operations in 2024 after a near-death experience, and promote Whyalla’s magnetite potential to a global audience,” Gupta reportedly said.
As Renew Economy reported on Wednesday, the steelworks are old, but had been hailed as an opportunity by Gupta to modernise and create “green steel” for an international market hungry for low emission products.
The state government embraced that plan and promised $600 million to fund a 250 MW green hydrogen electrolyser and a 200 MW hydrogen power plant – both among the largest in the world – to support the steelworks, other customers, and the state’s own plans to reach 100 per cent net renewables by 2027.
The Hydrogen Jobs Plan had been put on hold by the state, given the concerns around the steelworks. The money set aside for the policy is now being used to secure the steelworks future.
Malinauskas says Whyalla – one of only two Australian steelworks – is critical to sovereign steel, producing 75% of Australian structural steel, and is the only domestic producer of long rails and structurals.
“For months, my government has been carefully planning a strategy to address the challenges unfolding at the Whyalla Steelworks,” the premier said in a statement
“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.”
SA Labor says the administrators will investigates options including sale of the business, with the aim of delivering the best outcome for creditors and continued operation of the steelworks.
More to come.
With reporting from AAP
