Struggling Whyalla Steelworks Hit by Stoppage

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Work has stopped temporarily at one of Australia's most important steelworks at Whyalla just one month after it was placed into administration by the South Australian government.

It is the latest blow for the plant that employs more than 1,000 workers and which was responsible for producing 75% of the country's structural steel in 2024 and is the only Australian producer of long steel products. Following advice from the administrators, Kordamentha (Melbourne, Australia), and engineers from rival steelmaker BlueScope (Melbourne, Australia), work has been halted for implement "urgent" repairs. In recent years Industrial Info has been tracking a number of projects at the site including replacing the existing coal-fired blast furnace with a lower-carbon electric arc furnace (EAF) and associated infrastructure. The owner at the time claimed that the new furnace would transition the plant to low-carbon steel and boost projection from the current 1 million tonnes per annum (mtpa) to more than 1.5 mtpa. The 2025 startup date originally proposed had been pushed out to 2027, but now the future of that project is in doubt. Industrial Info is tracking 10 projects at the steelworks. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.

The 60-year old plant suffered a number of long outages lasting several months over the past year, leading to debts of US$828 million. Until last month, the steelworks at Upper Spencer Gulf was owned by global metals giant GFG Alliance (London, England), the steel empire run by Indian-born U.K. billionaire Sanjeev Gupta. GFG Alliance has been embroiled in financial and legal troubles since 2021 when its main lender Greensill Capital, collapsed. At the time, GFG owed Greensill around US$5 billion, and years of legal battles have impacted GFG's corporate stability and jeapordized many projects. In February, the South Australian government forced the plant, which was operated by GFG Alliance company OneSteel, into administration and President Peter Malinauskas stated: "For months, my government has been carefully planning a strategy to address the challenges unfolding at the Whyalla Steelworks. Throughout that period, we gave GFG every opportunity to make good on its promises and to bring creditors back into terms. It has failed to do so. GFG is no longer running the Whyalla Steelworks and associated mines. The South Australian Government has intervened. The steelworks is now in the hands of an administrator, who will stabilise operations and explore a possible sale to a new owner. We have received advice that the steelworks is being run into the ground to the extent that it may become irredeemable." Shortly afterward, state and federal governments announced a AUD$2.4 billion (US$1.5 billion) rescue package for the steelworks, including AUD$400 million (US$255 million) to keep the steelworks going during administration.

In the past few weeks, the administrators have reported that things at the steelworks were far worse than initially thought and that it is currently losing AUD$1.5 million (US$960,000) per day. Kordamentha administrator Lara Wiggins wrote: "The early stages of the administration have identified severe challenges to the Administrators...including with respect to the state of disrepair of OneSteel's operations and occupational health and safety. Since taking control of OneSteel, we have identified that OneSteel has sustained a long period of underinvestment, inadequate or no maintenance, poor health and safety practices, has insufficient spare parts and inefficiencies operationally and financially. [We are] "not currently satisfied that OneSteel is compliant with all occupational, health and safety requirements".

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).