Coalition pledges $49.2m loan for equipment to help Whyalla steelworks

HE hasn’t matched Labor’s $100 million pledge — but the Prime Minister is promising a big loan to Arrium for new machinery at the Whyalla steelworks if the Liberals win the election.

• Labor pledges $100m to save Arrium steelworks
• Questions over Labor’s $100m Arrium plan
• Whyalla steelmaker goes into voluntary administration
• 4000 SA jobs gone if Whyalla steelworks closes

NEW machinery to boost production at the Whyalla steelworks could be operating as soon as February if a Liberal government is re-elected.

Prime Minister Malcolm Turnbull will today announce that the Coalition will provide a $49.2 million loan for equipment at two mines to remove waste materials from ore to make if of higher grade.

The Coalition says Arrium administrators have advised that the investment is the most immediate action that can be taken to improve the profitability of the steelworks. The equipment could be up and running by February, it says.

During the week, Labor leader Bill Shorten promised $50 million in grants and $50 million in financing for the troubled steelmaker, if elected.

That $100 million would be combined with the State Government’s $50 million commitment, creating a $150 million package to be offered to a new buyer through a joint “Steel Reserve”. It would be used for investment projects approved by both governments, not to pay off debts or fund operating costs.

Whyalla’s Arrium steelworks. Picture: Campbell Brodie.

But the Coalition’s plan differs. Rather than handing out grants, it would provide $49.2 million as a loan for new beneficiation equipment and recoup it after the sale of Arrium.

The funds would be secured against the equipment, which the Government said would add $241 million to Arrium’s cashflow over the next five years.

The interest rate has not been released but the Sunday Mail understands it would be negotiated between officials and the administrator before the July 2 election. An agreement would be finalised after the election if the Coalition wins.

“I have discussed this project with the administrator, Mark Mentha, and our own adviser,” Mr Turnbull said.

“It is a practical ‘no regrets’ investment which will lower the cash cost of iron ore production in the near term and supports both mining and steel making and the jobs which depend on them.

“The Commonwealth’s investment is protected by taking security over the assets.”

Opposition Leader Bill Shorten visiting Arrium last week. Picture: Kym Smith

The embattled steelworks has been in voluntary administration since April after it was hit by the dumping of cheap foreign steel and a slump in commodity prices.

Last month Mr Turnbull and US President Barack Obama agreed to fight the global steel glut badly affecting Whyalla.

Industry Minister Christopher Pyne has announced a crackdown on the dumping of cheap steel.

“In contrast to the Coalition’s decisive action, Labor is just promising to hand out grants, which is nothing more than old industry policy,” Mr Pyne said.

“Arrium and the workers of Whyalla cannot wait while Labor tries to resuscitate its failed industry policy.”

The Coalition has also committed to use Australian steel to build a new fleet of patrol boats and steel from Whyalla to upgrade 1200km of rail between Adelaide and Tarcoola.

Originally published as Coalition pledges $49.2m loan for equipment to help Whyalla steelworks