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18 March 2025

Whyalla Steelworks Blast Furnace Set To Shutdown Again Amidst Operational Challenges

A temporary halt for urgent maintenance raises concerns over the facility's future and financial stability.

The Whyalla Steelworks, one of Australia's key steel producers, is set to temporarily shut down its blast furnace on March 19, 2025, for urgent maintenance. This 36-hour halt, as announced by South Australia’s Energy and Mining Minister Tom Koutsantonis, is imperative as the furnace, pivotal to steel production, shows signs of severe operational wear and tear.

According to Koutsantonis, the shutdown will allow for necessary repairs on key components, including the taphole, which pours molten metal. "It's a very quick 36-hour shutdown to fix some of the refractory plates...," he explained on ABC Radio Adelaide. The decision follows persistent operational challenges faced by the steelworks, primarily under the ownership of British industrialist Sanjeev Gupta, and raises flags about the overall health of the facility.

The operational issues at Whyalla Steelworks are far from new. Reports indicate this shutdown is the result of the facility's extended struggle with underinvestment and inadequate maintenance. The blast furnace, dating back to the 1960s, has been subject to two major shutdowns within the last year due to cracking and other operational inefficiencies, resulting in significant financial losses. The plant had incurred daily losses of $1.5 million prior to entering administration on February 19, 2025.

The administrators, KordaMentha, revealed through Lara Wiggins' affidavit filed with the Federal Court, the steelworks do not currently possess sufficient funds to sustain operations long-term. The report also indicated the steelworks owed approximately $1.3 billion to creditors. Wiggins highlighted, "The Administrators do not currently have sufficient funding to continue operations for twelve months," which is alarming for both workers and stakeholders involved.

Faced with such financial distress, the South Australian government and federal authorities previously announced a combined $2.4 billion rescue package intended to stabilize Whyalla's operations amid the chaotic turn of events. This included up to $400 million earmarked for immediate operational needs during the administration period. It aimed at ensuring wages and payments could be met, thereby providing some stability to local businesses reliant on the steelworks.

Mark Cain, CEO of the Australian Steel Institute, stressed the importance of government support in these pressing times, stating, "We welcome administrators stepping in to stabilise the business and sure creditors are paid." His comments reflect the widespread anxiety surrounding job security and economic stability within the region, as Whyalla produces about 75% of Australia’s structural steel.

Moving forward, KordaMentha has engaged corporate advisory firm 333 Capital to explore strategic options for preparing the Whyalla Steelworks and its mines for potential sale. They hope to revisit operations within six months, at which point financial health and strategic pathways could be clearer. Given the lack of access to OneSteel's financial records due to complications between OneSteel and its former parent company, GFG Alliance, this task may be more challenging than anticipated.

Wiggins raised concerns about occupational health and safety standards as well, indicating the facility has operated below acceptable norms for too long. "Health and safety is currently one of our major areas of focus. We are also extremely concerned about the health and wellbeing of the Whyalla workforce," she stated. Emphasizing the importance of these standards speaks to the broader community's well-being and the risks associated with inadequate maintenance.

With the community depending heavily on the steelworks, concerns about job security and economic viability are palpable. Premier Peter Malinauskas remarked last month, "We took action toensurethat Whyalla has a future. And we’re not wasting a minute making sure we’re backing the community." His words echo the shared sentiment among residents and local businesses, seeking reassurance amid the uncertainty.

The immediate future may seem fraught with challenges, but the collective focus on rectifying operational shortcomings and addressing financial deficiencies offers some hope. Industry watchers will be closely monitoring progress as the team of engineers from BlueScope manages repairs and as KordaMentha works through its administrative challenges.

For the time being, stakeholders remain cautiously optimistic, hanging onto the prospects of the steelworks’ revival and the jobs it supports. The role of Whyalla Steelworks is not just about steel production; it is about the heart of the community and its resilience against economic turbulence.