Troubled Whyalla steelworks gets $2.4bn government bailout as hunt for new owner begins | South Australia

A support package of $2.4bn will be poured into the Whyalla steelworks to protect thousands of jobs and “invest in the nation”, the prime minister says.

The federal and South Australian governments would “combine dollar for dollar on administration” to ensure the steelworks kept operating, and staff and creditors were paid, while a new owner was found, Anthony Albanese told steelworkers.

“But in addition to that, between our two governments, we have $2.4bn to make sure that this transition occurs,” Albanese said, while visiting the town on Thursday.

A day after the SA government rushed legislation through parliament that allowed it to place steelworks owner GFG Alliance into administration, Albanese said Australia “cannot just be a quarry that exports things overseas, waits for jobs to be created, waits for value to be added, and then import it back”.

The funding would deliver $100m in immediate support, including creditor assistance payments ($50m), infrastructure upgrades ($32.6m), jobs matching and skills hub ($6m) and stabilising the steelworks ($384m).

The state and federal governments would jointly invest $384m to fund the steelworks’ operations during administration, ensuring workers and contractors kept working and continued to be paid.

Another $1.9bn was allocated to investing in upgrades and new infrastructure to ensure the steelworks had a sustainable future.

GFG had been under intense pressure from the government to pay debts to creditors of the steelworks and the state, which is owed “tens of millions of dollars”, including $15m to SA Water.

Administrators KordaMentha said keeping the steelworks running would “preserve around 4,000 direct and indirect jobs”.

The SA government had deferred plans for a $600m hydrogen plant at Whyalla, and that funding would be directed to the support package, as well as $50m from the Whyalla Steelworks Operational Efficiency Improvements Fund.

The premier, Peter Malinauskas, said he was “never going to allow a taxpayer funded bailout of GFG”.

“Now that the steelworks is no longer under the control of GFG, the state government can partner with the federal government and make the long-term investments necessary to secure the future of Whyalla and Australian steel making,” he said.

New green iron investment fund

The federal government also announced a new green iron investment fund to boost green iron manufacturing and supply chains.

Up to $500m from the fund would support the longer term transformation of the steelworks, and make financing available to the future steelworks owner to upgrade the facility to produce green iron.

The opposition leader, Peter Dutton, said the government’s approach to the renewable zoning policy had been a disaster.

“There’s no greater example of it than in South Australia right now. If the prime minister wants to continue this game, then there are going to be job losses in Whyalla,” he told radio 2GB.

“I think the premier of South Australia realises that the game is up, a lot of taxpayer money has been wasted. If the government’s continuing to put good money after bad with green hydrogen, then they will do damage to the economy and those local jobs at the Whyalla steelworks will be lost.”

GFG’s owner, the British 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.

Gupta last Friday said a debt settlement deal had been reached with creditors of global financier Greensill Capital, which had advanced billions of dollars in credit to GFG before collapsing in 2021.