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Ministers differ over foreign steel as Arrium talks continue

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Senior Turnbull Government ministers appear to be at odds over a Labor plan that would force Australian governments to use local steel for infrastructure projects.

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Opposition Leader Bill Shorten proposed the measure after debt-laden steel making and mining group Arrium, which employs 3000 people in South Australia and 7000 across the country, was placed under voluntary administration yesterday.

Treasurer Scott Morrison dismissed the idea as a “kneejerk reaction”.

“The sort of thing that says: let’s tear up our trade agreements; let’s tear up the jobs in the new economy to go and play politics with an issue in South Australia,” he told ABC radio this morning.

But Industry Minister Christopher Pyne was more open to the plan, saying state and territory governments using federal funds for projects should use Australian steel.

“Sometimes it’s not always exactly possible,” he told the Nine Network.

“We don’t always make every kind of steel, but where we do, we should be allowed to compete.”

Pyne told FIVEAA Radio on Tuesday that he planned to write to the New South Wales Government over its “regrettable” decision to import Spanish steel for its $8.3 billion Sydney Metro North West rail project”.

“I will be raising my concern with Mike Baird and in fact I intend to write to him and ask for an explanation,” he said.

“New South Wales is not doing the right thing in comparison to other states like Victoria and South Australia.”

Pyne told ABC Radio National on Wednesday, however, that “there is only one steel construction business in Australia that makes construction steel, that’s Whyalla, there’s one that makes flat steel, that’s Port Kembla – if you say that 100 per cent of all construction must be from those two businesses then you have effectively created a monopoly and the tax payer can be charged any price by those businesses for that steel so that would obviously be quite irresponsible”.

SA Treasurer Tom Koutsantonis said he had been pleased with Pyne’s intervention to stop foreign companies dumping cheap steel in Australia.

“The Chinese Government … is subsidising the manufacture of steel in its mills in China (and) they’re dumping that inferior quality steel quite cheaply here,” Koutsantonis told FIVEaa this morning.

“Australian steel can’t compete, and the irony of it all is that they’re using our iron ore to make that steel.

“So we’ve got new policies in place – Christopher Pyne has put in tariff restrictions and tariff penalties on that cheap imported and inferior steel.”

Koutsantonis said the South Australian and Federal Governments were working together to help save Arrium.

He said “what you’re seeing now is the Federation work at its best, you’re seeing the Commonwealth Government and the State Government working together”.

“There’s no bickering, it’s cooperative. It’s the way our founding fathers wanted this to work.”

Shorten told FIVEAA this morning “we need to have the tougher anti-dumping laws, we need to make sure that we are maximising Australian content in infrastructure projects”.

“We also need to make sure that the standards which we set for use of steel in our construction, that’s steel from wherever it’s sourced meets the appropriate standard.”

He said Labor’s proposal was “entirely consistent with Australia’s international trade obligations”.

 

Meanwhile, Arrium’s administrators say the business has no immediate cash concerns and can continue to trade while a plan to take the company forward is negotiated.

Mark Billingham, from administrators Grant Thornton, met with union officials in Adelaide this morning.

He said workers at Arrium’s Whyalla operations and across the country are their first concern.

He said the meeting was open and constructive and the administrators have a plan which relies on all the stakeholders supporting Arrium.

“It’s early days but we’re very happy with the support we’ve had from creditors, suppliers and customers,” Billingham said.

“Our forecasts show that we’ve got no particular cash concerns.

“It really depends on customers continuing to support Arrium, buying the products, that’s very important.

“We see no particular issues there.”

The Australian Workers Union has also described Friday’s meeting as positive.

Billingham will later meet with Koutsantonis and Pyne ahead of a meeting of Arrium creditors later this month.

Koutsantonis met with Administrator Grant Thornton this morning.

He expressed concern this morning that the big four banks would try to appoint a new administrator to the company next week.

“I don’t want to hear … any dispute about who the administrator is,” he told ABC 891 radio this morning.

“We need to settle this down and settle this down quickly.”

He said that banks wanted a particular administrator, but the board of Arrium appointed Grant Thornton instead.

“The process if they want to change the administrator is quite complicated,” he said.

“My concern is (that) the administrator’s job for the next eight days is … to enter into contracts, all the contractors who supply Arrium. And while he’s entering into all these contracts he is becoming personally liable for any of those contracts.”

“If a new one’s appointed has to start that all over again.

“So what we need is continuity.”

Koutsantonis said he was also “very concerned about the trade creditors – they’re the people who supply Arrium, they’re the people who deliver the milk, who deliver the catering, the people who deliver the ancillary work who all of a sudden have all of their bills, their invoices frozen”.

“When I’m meeting with the administrator today I’m going to spend a fair bit of time trying to understand who they are, where they’re located.

“Arrium’s obviously a very big customer not just in Whyalla but across Australia – there will be a number of industries affected.”

Arrium is more than $2 billion in debt.

Trading in its shares was suspended on Wednesday after lenders rejected a $US927 million ($A1.23 billion) lifeline from US private equity group GSO Capital Partners that would have them suffering steep losses.

– with AAP

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