Whyalla faces 3000 job losses as Arrium seeks bailout to save OneSteel, mining operations

THE future of mining and steelmaking in Whyalla is under threat with governments, community leaders, unions and steelmaker Arrium having less than six months to come up with a plan to save 3000 jobs.

16/11/15 Jobs to be lost at the Arrium steel works at Whyalla. photo Calum Robertson

• OneSteel must cut costs or it faces closure
• Resilient town says it will survive — but needs help
• Steel industry in a fight to survive cheap imports
• Iluka to mothball SA mine, cut 33 jobs
• SA manufacturer pulls the pin and slams free trade agreements

THE future of mining and steelmaking in Whyalla is under threat with governments, community leaders, unions and steelmaker Arrium having less than six months to come up with a plan to save 3000 jobs.

The Eyre Peninsula town is on a razor’s edge as the main employer faces being forced to shutter the OneSteel steelworks to stop it bleeding cash.

The future of part or all of the mining operation is also under threat.

As part of the response, Federal Industry Minister Christopher Pyne on Thursday will call an urgent investigation into whether imported steel is being illegally dumped in Australia.

“I am concerned that distortions in the global market for steel and aluminium are unfairly damaging the viability and growth of the Australian steel sector,’’ Mr Pyne said.

Premier Jay Weatherill on Wednesday urged the Federal Government to help save Australia’s capacity to make steel.

“It’s as fundamental to our sovereignty as protecting our borders,” he said.

Whyalla was at “real risk” and Mr Weatherill said the State Government was in deep discussions about a rescue plan to secure the long-term future of the industry.

The numbers at a glance

On Wednesday Arrium said it has begun planning to put the steelworks, which employs 1150 OneSteel workers and 450 contractors, into “care and maintenance”.

A decision would be made by midyear on its future.

As well as the steelmaking plant, Arrium’s mining division in Whyalla is running at a loss and similarly faces being placed in “care and maintenance”, putting a further 1400 jobs at risk.

Any plan for large-scale reductions in staff numbers and/or spending would also surely lead to further job losses in the steel town.

“We need all stakeholders to play a role in securing the business’s future,” Arrium managing director Andrew Roberts said.

“This is critical, not only for Arrium and its employees, but also the broader Whyalla community.

“Arrium is very conscious of the key role it plays in Whyalla, and will ensure everything possible is done to enable these businesses to be viable and sustainable.”

Australian Workers’ Union Whyalla branch organiser Scott Martin said the town’s workers had always been resilient.

“But this is serious — it’s not just talk about downscaling, this is mothballing,” he said.

“Once that occurs at a steelworks, it’s very hard to get going again, no doubt.”

Mr Pyne has written to Anti-Dumping Commissioner Dale Seymour requesting an urgent investigation into steel and aluminium.

The inquiry, which is due to report by early April, could recommend that the government impose new duties or a floor price on imported steel.

The Arrium steelworks at Whyalla. Photo: Calum Robertson

“Australian steel and aluminium producers have made representations to me that the global overcapacity, particularly from Asian markets, is having significant economic impacts on the Australian domestic market,’’ Mr Pyne wrote in his letter to Mr Seymour.

In January, the anti-dumping commission made a preliminary finding that Arrium was suffering from unfair and damaging imports.

It imposed a dumping penalty on certain Chinese imports, following earlier penalties on Korea, Singapore, Taiwan and Spain.

Whyalla’s steelworks lost $43 million in six months and needed $24 million in capital expenditure, draining money from the debt-stressed company.

The mining division lost $20 million in six months and absorbed $56 million in capital expenditure.

The extent of the problem was revealed on Wednesday as Mr Roberts reported financial results for the half-year to December, a net loss of $236 million across Arrium’s international operations.

By midyear, Arrium aims to have several options on the table to present to its board following negotiations with state and federal governments, workers, unions, contractors and suppliers.

Options could include mothballing only the most unprofitable parts of the steel plant.

Mr Weatherill declined to specify what the State Government could offer.

Arrium pays state payroll and land tax and royalties on iron ore exports.

However, even if Treasurer and Mineral Resources Minister Tom Koutsantonis cranked these levers down to zero it would not be enough to save Arrium, The Advertiser understands.

Mr Koutsantonis said the Government already waives royalties on iron ore used in the Whyalla steelworks.

The OneSteel plant in Whyalla, where 1150 workers and 450 contractors could lose their jobs.

The Government has established a $4.3 million Steel Taskforce and instigated a new steel procurement policy, mandating that all future State Government projects use steel only from Australian-standard certified mills and fabricators.

It also is helping Arrium find other companies wanting to use the Whyalla port.

Since October last year, Arrium has already cut more than 300 jobs from its OneSteel and contractor workforces and slashed $100 million a year from operating expenses.

However, it said it must find another $60 million in cost cuts to break even.

The mining division has succeeded in reducing by 23 per cent its costs of producing iron ore for export from the Whyalla dock.

However, it averaged sales at $57.60 a tonne, delivered to China, where the spot price of iron ore dipped as low as $US38/t ($53) in December.

Aaron Cartledge, state secretary of the CFMEU which represents about 200 OneSteel workers said the news was “another blow for a region that has already taken a number of serious hits”

“An assistance package from the Federal Government needs to be negotiated urgently — they’re the main players in this.”

Whyalla mayor Tom Antonio convened an urgent meeting of key stakeholders, including senior council staff and federal Liberal member for Grey Rowan Ramsey.

Local state MP, Labor’s Eddie Hughes, a former Arrium worker, said that the Government was determined to help.

“We did not walk away from the Port Pirie community and we will not walk away from the Whyalla community,” he said.

One Steel worker Steven Byrne is nervous about his future. Picture: Kelly Barnes.

Steel Caster Steven Byrne said the mood inside the OneSteel plant was despondent after a meeting held early on Wednesday during the day shift.

Workers were not given specific numbers of lay-offs but word quickly spread that as many as 400 redundancies were under consideration

“We’ve just been through the whole doom and gloom of losing 250 blokes (laid-off in January) and now it looks like another 400 will go if not shut down the whole thing,” the married father of a nine-year-old boy said.

“Everyone feels like they’ve been shit on again.

“We’ve just avoided the noose and now it’s another death sentence.

“Everything is shut down a the moment and the word on the floor is there’s a strong chance they’re going to shut it down (the plant) and just keep up basic maintenance in the hope things improve.”

Mr Byrne said workers had their suspicions raised recently when the blast furnace was shut down on a regular basis.

“The blast furnace goes down for 48 hours every two to three weeks now,” he added.

“They say it’s for maintenance but I think we can all work out what’s going on.”

Mr Byrne, who has lived in Whyalla since moving with family from Wallaroo aged three, said he did not know what his future held.

“I’ve got my own little family here with a kid and a missus and I’ve never considered moving anywhere else or doing anything else.

“They said they keep us up to date but we’re normally the last to hear and have to read in the paper.”

Collapse would damage Australian economy

Christopher Russell, Peter Jean

THE Australian economy will be at severe risk if the nation allows the steelmaking industry to collapse, Premier Jay Weatherill warned yesterday.

“South Australia has an interest in ensuring a long-term future for the creation of structural steel — indeed, the nation has an interest,” he said.

“It’s an issue of the sovereignty of our nation that we’re able to produce structural steel in this country.

“Whyalla is the only place that does this anywhere in the nation. It’s as important to the nation as some of the fundamental issues that arise around our sovereignty concerning the defence of the nation.”

The OneSteel plant in Whyalla, owned by Arrium, manufactures “long” products such as steel reinforcing bars and beams used in building construction. The BlueScope plant in NSW makes “flat” products such as roofing sheets.

Steelmakers worldwide are under stress because of oversupply in international markets, leading to dumping of products below cost.

Federal Industry Minister Christopher Pyne said yesterday that anti-dumping reforms implemented by the Government were having an impact.

An inquiry by the Anti-Dumping Commission, initiated by Mr Pyne, would be used in the development of the next stage of anti-dumping reforms.

“Input into the reforms from stakeholders will also be critical,” Mr Pyne said.

Australian Steel Institute chief executive Tony Dixon said the industry did not need grants and assistance like the automotive industry. “We just want a level playing field.”

The South Australian Government has instituted a policy that only certified and compliant Australian steel be used in its projects. It is seeking agreement from other states to implement similar policies.

However, Treasurer Tom Koutsantonis said other states had yet to agree.