The workforce from the Whyalla steelworks, its port, and an associated mine will be reduced from 1,700 to about 1,200, according to administrators KordaMentha. Photograph: Lincoln Fowler/Alamy
Hundreds of workers at Whyalla’s steelworks will lose their jobs after the heart of the operations – the blast furnace – repeatedly failed to fire, in a devastating economic blow for the South Australian seaport city.
The decision to abandon further revival efforts will effectively shut down most of the operations at one of Australia’s two remaining steel facilities – and the last to manufacture rail steel in the country.
The workforce from the steelworks, the port, and the associated mine will be reduced from 1,700 to about 1,200, according to administrators KordaMentha. Another 100 labour hire workers will also lose their jobs.
The South Australian premier, Peter Malinauskas, said the 60-year-old blast furnace’s “days were numbered”.
“There was always the intention that it would close. We would have liked it to last a little bit longer, but, alas, it hasn’t been able to,” Malinauskas said on Monday.
Malinauskas said redundant workers would receive their full entitlements and that the state and federal government would provide a $10m package that includes support for “re-skilling and training”.
The coal-fired blast furnace has been offline since April.
The Whyalla steelworks were part of British industrialist Sanjeev Gupta’s metals empire until early last year when the South Australian government tipped the operations into administration after years of underinvestment.
Gupta’s family-run business started losing control over large parts of its global steel making operations after the collapse in 2021 of Greensill Capital, his key lender.
The state government said last year that upgrade promises, including installation plans for an electric arc furnace to replace the ageing coal-based system, were repeatedly unfulfilled.
The federal and state governments unveiled a $2.4bn support package to keep the plant running, pay employees and creditors, upgrade infrastructure, and ultimately entice a new buyer to reinvigorate the plant.
Sebastian Hams, a KordaMentha partner, said on Monday that efforts by workers to keep the blast furnace operating over many years should be commended.
“This is a difficult decision, but it is a necessary one as the company transitions to modern steel making technologies,” Hams said.
‘Politicised’ debate
Whyalla’s mining and steel operations represent the economic foundation of a city relied on by numerous workers along with other businesses, from contractors to cafes.
Operations will now be severely restricted, with the plant to rely on stockpiles and externally sourced semi-finished steel products to keep manufacturing going. Port operations will also continue.
Administrators hope to sell the business without an operational blast furnace.
The Australian-based M Resources, Indian company Jindal Steel and BlueScope Steel were among the potential suitors.
The Whyalla troubles ignited a political debate on Monday, with the Coalition and conservative commentators blaming the closure on the government’s clean energy transition policies, and a lack of investment in coal.
Labor’s industry and innovation minister, Tim Ayres, accused the Coalition of politicising the collapse of the steelworks, and he said linking it to net zero policies was misleading.
“Everybody is throwing themselves at this giant task, and all these guys can do is turn up and try to use them as political pawns,” Ayres said.
The Institute for Energy Economics and Financial Analysis has noted that coal-consuming blast furnaces were being increasingly challenged around the world by alternative technology that was being prepared to run on “increasing amounts of green hydrogen”.
Tim Buckley, a former investment banker and the director of Climate Energy Finance, said on Monday that “putting Band-Aids on an antiquated, beyond end-of-life facility” had proven to be a waste of taxpayer funds.
“The future for Whyalla lies in an electric arc furnace using electricity powered by renewables to produce steel at a fraction of the emissions of coal-fired blast furnaces, and developing the state’s valuable magnetite iron ore resources,” Buckley said.
