Unions push for public ownership of Whyalla steel, to keep green dream alive

The Whyalla steelworks should be placed into public ownership, given the necessary investment and turned into a global showcase for green iron and steel production, according to a new report released by SA Unions.

The report released on Tuesday outlines a blueprint for how the town might respond after the South Australian government took control of the steelworks and forced out its owner, Sanjeev Gupta as part of a $2.4 billion rescue plan.

As a former white knight investor, Gupta’s company group, GFG Alliance, previously promised to revitalise the steelworks by producing green steel but ran into trouble when his business empire began to collapse under the weight of its debts.

The state government had previously offered the company $600 million in support to buy a 250MW green hydrogen electrolyser and build a massive 200MW hydrogen plant as part of this plan.

In February the state government finally lost patience with the company, taking over the steelworks in a dramatic scene with the Premier, Peter Malinauskas, meeting with state MPs before announcing that Korda Mentha had been appointed administrator of OneSteel Manufacturing. Federal intervention soon followed.

The SA Unions report is an attempt to shape decision making about the future of the facility with the best interests of the local community in mind. It was commissioned to examine options for a just transition and considered whether it best to find a new private owner to take it over, or for the government to embrace a public ownership model to deliver the necessary investment.

Alistair Rainie, Adjunct Professor at the University of South Australia Business School, one of several authors on the report, said public ownership should be the preferred option, and that government should not give up its ambitions for Whyalla, as the steelworkers was in the rare position of having everything it needed to make green iron and steel.

“It was clear when [the administrators] KordaMentha took it over that there had been very little or no investment in the works for a long time. It was very run-down, it was in very bad shape,” Rainie said.

“What it needs is investment. Whyalla has both magnetite ore and a ready supply of renewable energy, both in terms of existing plans to create a hydrogen hub and because the state is so much further down the renewable path than other states, it has an advantage.

“This places it in a fundamentally better position to produce green iron and green steel – and that’s very rare. Far, far better than the Pilbara.”

Separate work by IEEFA has suggested Whyalla remains a significant site for the future production of green steel, although its furnace is outdated, the existing infrastructure at the site gave it an advantage over other candidate sites. 

Upgrading the existing infrastructure was cheaper than starting over, IEEFA found, with the price tag running into the multiple billions for greenfields sites.

In one example it pointed to, a feasibility study for the Southdown Magnetite Mine in Western Australia estimated the cost of establishing a concentrate plant with a capacity of 5 million tonnes per annum and a 110km slurry pipeline at $A2.34 billion.

In another example, IEEFA pointed to a pre-feasibility study for the Mount Bevan magnetite mine that projected more than $A5 billion would be needed to develop a 12Mtpa concentrate facility and a 125km slurry pipeline. 

“It is prudent to begin the green steel transition in locations with well-established facilities, as this can ease the initial phase and mitigate risks for Australia’s iron and steel sector,” it said.

To get Whyalla up and running, Rainie said plans to produce green hydrogen nearby should be revived, an electric arc furnace should be installed and direct reduction iron plant set up. This would provide a way of treating iron and turning it into steel without the production of greenhouse gases from a regular furnace.

“There’s only a couple of places on the planet moving in this direction rapidly now, Scandinavia being one, and to some extent China,” Rainie said. “Whyalla could be a showcase –this could be a genuine Whyalla moment.

“We could have a proper just transition here that is a show stopper not just for Whyalla, not just four South Australia, not just for Australia, but to demonstrate for the world how it’s done.”

Rainie said that the alternative option was to seek a private buyer for the steelworks, but this would be a long, slow process and recent experiments from Scotland and the UK have “not been very happy”.

BlueScope steel has previously been considered a possible candidate for taking over the steelworks.

If the steelworks was returned to private ownership, the report said state and federal governments should impose conditions to lock a commitment from any new owner to produce green hydrogen, iron and steel, to maintain a pre-existing commitment to operating both the magnetite mine and the steelworks, and to undertake social and cultural investment in the local community.

“Whyalla is a town of 20,000 odd thousand people who are dependent on the steelworkers,” Rainie said. “They’ve had a very rough time over the last 20-years, they deserve some good times.

“More importantly, green steel is absolutely vital. From the house you live in and the car you drive, to your laptop, there is steel kicking around. Steel is one of the most polluting industries on the planet, to deal with climate change, we need to decarbonise steel.”

When announcing the billion-dollar rescue package for the Whyalla steelworks in February, Prime Minister Anthony Albanese described the “enormous” opportunity offered by green steel and announced a new Green Iron fund to support new projects and encourage private investment.

The South Australian state government also signalled that it still has not abandoned hope for a green hydrogen hub, with a spokesperson saying a plan to build a green hydrogen electrolyser and power plant at Whyalla “had not been ruled out” but it was focussed on ensuring the survival of the facility in the short term.

According to the International Energy Agency, the steel industry globally accounts for 2.8 gigatonnes of CO2 emissions each year, or 8 percent of total energy system emissions.