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Threat of closure hangs over Whyalla steelworks


Saving the Whyalla steelworks from closure is as important a national issue as homeland security and “protecting our borders”, says Premier Jay Weatherill.

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Weatherill’s comments came this morning after Arrium suggested the troubled steelworks faced the prospect of being mothballed unless it can cut costs at the operation – the key employer in the Iron Triangle town.

The Australian Workers Union, which represents staff at the steelworks, says between 800 and 900 permanent workers were on staff at the facility, with an additional 200 contractors also employed.

Speaking at the opening of the Drill Core Library at Tonsley this morning, Weatherill said the steelworks faced a “real threat” and its rescue was of national significance.

“This is a real threat but we stand ready to support Arrium and Whyalla to get through this very difficult phase,” Weatherill said.

“It’s an issue of the sovereignty of our nation that we’re able to produce steel in this country. Whyalla is the only place that does this anywhere in the nation.

“It’s as important to the nation as some of the fundamental issues that arise around our sovereignty concerning the defence of the nation. It’s as fundamental to our sovereignty as protecting our borders.

“The notion of ensuring that we have a secure capacity to create structural steel is an essential part of a nation’s capacity to assert itself as having an independent sovereign status.”

Arrium’s half-year financial report posted to the ASX this morning showed Whyalla continued to haemorrhage, with the facility posting a $43 million operating loss despite a cost-saving program to save the plant.

The steelworks and the company’s iron ore mining operations would be placed in “care and maintenance” if an additional $60m on top of its original $100m cuts couldn’t be found.

While an Arrium spokesman told InDaily the steelworks were “not shutting”, he said Whyalla could be “mothballed” and maintained to restart if the financial climate improved for steel manufacturing.

“In the current environment it’s losing a lot of money and you cannot sustain that amount of money [loss],” he said.

A decision on Whyalla’s future will be made about June this year, he said.

Arrium today announced a further 300 jobs would be cut across the organisation in the first half of 2016 as part of plans to slash $200m from its whole operations over the next two years.

In October Arrium announced a $100m cost reduction program to improve competitiveness and an additional $60m gap has since been identified due to current low Asian steel prices.

Arrium announced late last year 280 positions would gradually finish up during this half of the year.

Weatherill said he had not been brief on Arrium’s mothball option if Whyalla was unable to close the $60m gap.

“No that’s not what we’ve been told. We have been told there are real threats to the ongoing viability of Arrium.

“We want to make sure any support we give to Arrium is support which provides a long-term sustainable future for that business.”

Weatherill would not be drawn on whether the government would bail out the Whyalla operations.

“What we are committing to do is the stand together with them. We’re in discussions, deep discussions with them and they’re quite advanced.

“We are also in discussions with the Commonwealth Government to be a partner with us in providing support to Arrium.

“People of Whyalla should rest assured that we are going to take every step within our power to work in partnership with both the Commonwealth Government and Arrium to ensure there is a future for the steelworks.”

The South Australian operation was the only black spot on an otherwise positive half-year report with Arrium announcing earnings had improved in all businesses other than Whyalla.

Arrium posted an overall strong performance despite weaker external markets, including the lowest Asian steel prices in 12 years, and recorded underlying earnings of $44m, up from $13m.

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