Labor will deploy $500m rescue funding to Whyalla steelworks
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The news: The Albanese government will help fund up to $500 million of green upgrades to the Whyalla steelworks if it is sold to new owners, according to The Australian and AFR. The news comes after the South Australian government forced the steelworks into administration and seized control from owners GFG Alliance.
The numbers: The rescue package will see the federal and state governments equally investing up to $500 million over six months to keep the plant running. Further investment to replace ageing infrastructure, such as the operation’s blast furnace will be required in the longer term, in efforts to position the project for future green steel manufacturing.
The context: Prime Minister Anthony Albanese and Industry Minister Ed Husic are scheduled to visit the Whyalla steelworks on Thursday when the "transformation plan" will be unveiled.
The state appointed KordaMentha as an administrator on Wednesday after losing confidence in the financial capability of GFG to pay its bills as and when they fall due, and GFG’s ability to secure funding needed for the ongoing operation of the steelworks.
SA Premier Peter Malinauskas said that while unable to disclose the exact figure for royalties owed by GFG, it falls in the tens of millions of dollars.
Malinauskas said the government was forced to intervene in Whyalla steelworks as the situation was becoming “irredeemable” and that GFG’s financial position “was compromising the very operations of the steelworks itself. That advice completely accords with all of the information that we are receiving on the ground from people who work within the steelworks.”
The premier said that he is confident the project has a viable long-term future under a new owner, and media reports are circulating that Bluescope could step in as a potential ‘white knight.’
GFG Alliance, a global metals empire of 30,000 employees helmed by Sanjeev Gupta, has been fighting numerous legal battles filed by creditors following the collapse of its key lender Greensill Capital in 2021.
The sources: AFR, State Government Press Release, Financial Times, The Australian
