SA Premier says steelworks can’t be allowed to close as Cabinet to head to Whyalla

South Australia’s Cabinet will travel to Whyalla to canvass community concerns around GFG Alliance’s beleaguered steelworks, which the Premier says can’t be allowed to fail.

Premier Peter Malinauskas at an economic summit in Whyalla earlier this year.

South Australian Premier Peter Malinauskas will take the State Cabinet to Whyalla next month to canvass community concerns around the future of the city’s steelworks, following news this week the government is doing contingency planning around the collapse of GFG Alliance.

The Premier, who had a phone hook up with GFG executive chairman Sanjeev Gupta late on Thursday to discuss the steelworks, has been at pains to reassure the community that the government does not think GFG is in immediate danger of failure.

This followed The Australian revealing on Tuesday that the government’s Department of Energy and Mining was seeking expert advice on the government’s exposure and role should Liberty Primary Metals Australia, the GFG subsidiary which owns the steelworks, go into voluntary administration.

The Premier told SA parliament on Thursday that Cabinet would travel to Whyalla on October 21 to have a Cabinet meeting and meet with community and business leaders.

“We know the steel industry around Australia is responding to increasingly slender margins and increased price competition from China and other steelmaking countries,’’ Mr Malinauskas said.

“South Australia and GFG are not immune to these global market pressures. We welcome GFG’s recent statements that they are continuing with their plans to ‘shape a stronger and more efficient plant that will last for years to come’ and that Whyalla remains Mr Gupta’s ‘highest priority’.

“We continue to closely monitor the situation.’’

Mr Malinauskas said Australia had a vast abundance of iron ore, and “we have to ensure we have a sustainable steelmaking capacity in this country’’.

“We simply cannot be one of the largest iron ore producers in the world and not manufacture our own steel.’’

GFG Alliance executive chairman Sanjeev Gupta.

The SA government in June unveiled a Green Iron and Steel Strategy, and Mr Malinauskas said this week that as part of that strategy, the government was in regular communication with steelmakers such as BlueScope, Japan’s Nippon Steel and Korea’s POSCO.

POSCO was the lead bidder for the steelworks after they were placed in administration following the collapse of Arrium in 2016, but were outmanoeuvred at the eleventh hour by Mr Gupta.

Mr Malinauskas on Wednesday said the government was “planning for all possibilities” and had raised concerns about the steelworks with Prime Minister Anthony Albanese.

“But we have no reason to discount what GFG has said publicly. They’re very confident about their position and we welcome that. But we also have to make sure that we are treading with a degree of caution,” Mr Malinauskas said.

The blast furnace at the steelworks went offline for the second time this year last week, with the timeline for its return to normal operations still uncertain.

Mr Gupta also revealed last week that the Whyalla operations, which also include iron ore mines, had fallen to a loss-making position after two years of profitability.

SA Treasurer Stephen Mullighan said this week that GFG had been in arrears on royalty payments to the state government for “several weeks” and this was “a serious issue for the state”.

Originally published as SA Premier says steelworks can’t be allowed to close as Cabinet to head to Whyalla