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Govt offers Arrium $49m loan for machinery

Business

Taxpayers will pick up the tab for new machinery at Arrium mines under a government plan to protect 2700 steelwork jobs in Whyalla.

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The $49.2 million loan will help the trouble steelmaking and resources company produce a higher-grade iron ore from two of its mines.

The Government expects whoever acquires the company after administrators sell it in August will repay the loan, or if not the commonwealth can sell the machinery.

“It will have an immediate impact on the business, securing jobs at Whyalla and Arrium, and it is exactly what the administrators have said is necessary to make the business viable into the future,” Industry Minister Christopher Pyne told reporters in Adelaide yesterday.

Labor has promised to give Arrium $50 million in grants and $50 million in loans via a new steel reserve.

The South Australian Government is kicking in another $50 million.

Pyne called Labor’s pledge a “rather nebulous promise … which most people can’t work out quite how that would work”.

South Australian Senator Nick Xenophon understands administrator Mark Mentha has outlined a long-term plan for the company in discussions with the coalition and Labor.

The independent senator wants that plan and any requests for assistance released publicly.

“What’s at stake is a long-term plan, an industry plan, that will make sense for taxpayers and for the economy and the jobs it will create,” he told ABC TV.

Arrium was placed in administration in April after negotiations with its lenders failed amid sustained low commodity prices.

Administrators KordaMentha expect the company to attract genuine interest from potential suitors, with the restructuring and sale of the group to be finalised by the end of the year.

-AAP

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