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Category: Mining Industry / Government and Politics

Taxpayers' money may be used to support steelmaker: SA Treasurer

Thursday, 18 Feb 2016 09:21:55

The State Government has warned taxpayers' money would have to be used if it decides to help the troubled Whyalla steelworks. (ABC News: Nick Harmsen)

Taxpayers' money will have to be used to support troubled Whyalla steelmaker Arrium if the State Government decides to help, according to SA Treasurer Tom Koutsantonis.

Key points:

  • Arrium steelworks at risk of being mothballed if it cannot turn its financial situation around
  • More than 1,000 jobs are at risk
  • SA Government says procurement policies are partly to blame

The company's steelworks is at risk of being mothballed if it cannot turn its financial situation around.

Mr Koutsantonis said he wanted to ensure that any money from the Government would be worth the investment.

"It's a very difficult situation," he said.

"I just want to prepare South Australians for this.

"Is it just simply a sugar hit to push it down the road awhile or can we actually structurally readjust Arrium ... to give them a long-term path to prosperity."

Arrium yesterday recorded a half-year net loss of $236 million, with the Whyalla steelworks posting a $43 million loss.

If the steelworks closes, more than 1,000 people will be out of work.

Hundreds of jobs have already been axed at the plant.

Arrium's general manager at the steelworks Theuns Victor said today more redundancies were possible.

Hope is not a strategy here.

Treasurer Tom Koutsantonis

"There's always a number of levers that you can pull when you start looking at the cost," he said.

"There's no doubt that labour is still a very significant part of our costs and therefore it's one of the components that we need to look at but that's not the only component.

"There's a lot of costs that we incur in running a significant business like this."

Mr Koutsantonis said the Government and Arrium had been discussing the situation "for a while".

"Hope is not a strategy here," he said.

"What we need to do is work out exactly what are the problems with the steelworks.

"There are multiple problems, the cheap dumping of steel which is really hurting Arrium.

"There are procurement policies around the country that are hurting Arrium.

"There are inefficiencies at the plant, the kiln is getting old, the cost of energy, the cost of resources and then of course its location and its port and the efficiency of the port."

SA working with Commonwealth and Arrium

Mr Koutsantonis said the Government was working with the Federal Government and Arrium to see how it could help keep the steelworks open.

Australian Workers Union representative Scott Martin has welcomed that response but said it might not be enough to save local jobs.

"There is a lot of support, and there is some financial support on the offer for Arrium, but like anything, I presume the Government probably want them to have some sort of sustainable action plan," he said.

"That if they do get financial help, that in 12 months time they don't just suck up that money and they are back to square one again.

"So I'm sure there's a lot of work going on behind the scenes, well in fact I know there is, how that all pans out we'll just have to wait and see."

Greens senator Robert Simms said the federal and SA governments should instead be investing in a "clean energy future" for the Whyalla region.

"Towns in the mid-north like Whyalla and Port Augusta are on their knees," he said.

"They need a plan that doesn't tether them to volatile world markets so if an industry like the Arrium steelworks or the Port Augusta power station faces closure, the towns can still thrive."

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