Whyalla steelworkers are struggling to get the city’s vital blast furnace back producing iron.
Whyalla problems and Nyrstar’s serious issues in Port Pirie are causing major problems for the Malinauskas government.
The Whyalla blast furnace has been offline since early last month and a potential sale is still a long way off.
“The blast furnace at the moment is not going through a good period, and we’re very concerned for it, and we continue to monitor it closely,” SA Premier Peter Malinauskas
The blast furnace faced similar shutdowns in the years before the state government put the previous owner GFG Alliance into administration last February.
“The blast furnace in Whyalla is a very old piece of kit that has been run down and not well cared for, particularly by the previous owner in GFG, and that has made it a very difficult piece of machinery to keep up and running and doing its job,” Mr Malinauskas said.
When asked about the potential impact of the blast furnace shutdown on the workforce, Mr Malinauskas said: “Everyone’s got their job at the steelworks and that’s what we’re working to maintain.”
But he then repeated a comment he made a week ago about possible “pain” before gain at the steelworks, conceding that could mean job losses.
“Potentially, yes, I don’t know, we don’t know what that looks like because it depends on how the sale goes, but there was always going to be a period where this blast furnace’s days were numbered and it’s a question of timing and whenever that occurs there will be challenges associated with that,” he said.
The premier said the blast furnace was close to the end of its working life and would be replaced by an electric arc furnace when a new buyer for the steelworks was found.
There are five bidders who have been shortlisted to take on the steelworks and associated mines and port, with that number expected to be reduced to two this month.
Among the bidders is Australia’s biggest steel maker, BlueScope, which is leading a consortium of global steel makers to take on the embattled business, which has gone into administration twice in the past decade.
The federal and SA government have put a $2.4 billion rescue package together in the hope of delivering a future for the business and the city of Whyalla by September this year.
But BlueScope CEO Tania Archibald told a business gathering in Melbourne recently that the purchase will “ultimately (need) to make commercial sense for shareholders” and raised potential obstacles to a successful sale.
“The grand ambition is to see that high quality mining resource developed and the establishment of DRI [direct reduction iron] production … but for DRI production at Whyalla to become a reality it will require a very large sum of capital, which at this point is undefined,” Ms Archibald said.
Ms Archibald said that a massive amount of cheap gas would also be required.
Negotiations are continuing into a package to support the future of the Port Pirie lead smelter, across the Spencer Gulf from Whyalla.
Ms Archibald also said there was still a “long way to go” before any decision would be made on the Whyalla steelworks.