Labor pledges $100m to save Arrium steelworks at Whyalla

UPDATED: Labor has announced a plan to save Whyalla steelmaker Arrium with a $100 million cash boost as new data shows a slight increase in SA’s unemployment rate.

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LABOR has announced a plan to save Whyalla steelmaker Arrium with a big cash boost for the struggling operation to keep thousands of jobs in SA.

But the Coalition is refusing the commit to a taxpayer-funded bailout of the troubled steelworks.

Labor’s pledge was timed to arrive on the same day new jobs data showed the unemployment rate in South Australia remained the highest in the nation in May at 6.9 per cent, up from 6.8 per cent in April. About 60,300 people are unemployed in SA.

The national unemployment rate was steady at 5.7 per cent.

Federal Opposition Leader Bill Shorten stood alongside Premier Jay Weatherill in Whyalla today as he pledged $100 million to save Arrium.

Mr Weatherill last week called on both major parties to promise $100 million for the steelworks, after he promised $50 million in state taxpayer cash to support a buyout.

Mr Shorten today promised $50 million in grants and $50 million in financing to protect 3500 jobs.

That $150 million package would be offered to a new purchaser through a joint “Steel Reserve”, with the expectation they would match the funding to upgrade the plant to make it viable.

Mr Shorten told The Advertiser he would “act to strengthen the local steel industry and protect SA jobs” if made prime minister at the federal election on July 2.

“I’m not prepared to sit back and watch thousands of South Australian jobs disappear like the Liberals did when the car industry closed down,” Mr Shorten said.

“Australia cannot be the only advanced economy in the world to let its steel industry die.

“I’ve spent my entire working life visiting places like Whyalla. I know how hard this has been for these workers.

“I genuinely hope Mr Turnbull can see how important this is for SA and match Labor’s commitment.”

However, Prime Minister Malcolm Turnbull and Treasurer Scott Morrison refused to commit taxpayer funds to Arrium if the Coalition is re-elected.

“We are not going to get into some political auction on this before an election — that’s not how you should make these decisions,” Mr Morrison said.

Mr Turnbull said Labor’s offer to Arrium was vague and did not specify how the funds should be used.

“It shows very little understanding of the challenges that Arrium actually faces ... it’s a characteristically unbusinesslike and political announcement from Mr Shorten,” Mr Turnbull said.

Mr Turnbull said Labor’s policies — would hurt Arrium’s customers, which in turn would undermine the steelmaker.

He gave the example of Labor’s plan to restrict negative gearing, saying it will slash demand in the building and property sector.

“(Arrium’s) biggest customers are ... the builders and the contractors, the people building department buildings and office buildings and of course roads and other infrastructure.”

Asked whether he had got everything he wanted, Mr Weatherill said “no, there’s more to go”. He said his government had put 11 items to both major parties.

“We’ve had some wins from the federal Liberal Party but at the moment the balance is very much in favour of federal Labor,” he said.

“We’ve tried to broker a bipartisan agreement on steel — Bill stepped up to the plate and we do invite the PM to join him.”

Arrium’s OneSteel operation at Whyalla. Pic: Calum Robertson

That $100 million, along with the State Government’s $50 million and $150 million from a buyer would mean $300 million to make the plant more productive, efficient, and sustainable.

The money will only be able to be used for investment projects approved by both governments, and not to pay off debts or fund operating costs.

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.

However, administrator Mark Mentha said today he had found $300 million in savings across Arrium for the 2016-17 financial year and the steelworks was now set to break even.

“Arrium is a far more efficient company today than it was yesterday,” he told ABC radio on Thursday.

“With the plant and capex initiatives that we’re looking at, this money will move the dial in making this business far more viable ... and therefore makes it a realistic long-term proposition for a buyer.”

Mr Weatherill wrote to Mr Shorten and Mr Turnbull to outline his proposal last week.

Mr Turnbull then said it was “premature” to throw money at the steelworks, and that his government had appointed Russell Caplan as an independent expert to work out a solution.

“It would be premature for the Australian Government to make any further financial commitments until Mr Caplan’s assessment of Arrium Whyalla and the administrator’s request for financial assistance have been finalised,” he wrote in a letter to Mr Weatherill.

Mr Turnbull has brought forward an order for 600km of rail using Whyalla steel to deliver more work to the plant, and Industry Minister Christopher Pyne has announced a crackdown on the dumping of cheap steel.

Last month Mr Turnbull and US President Barack Obama agreed to fight the global steel glut that has so badly affected Whyalla and put thousands of jobs at risk.

Professor John Spoehr, director of the Australian Industrial Transformation Institute, said the jobless numbers in South Australia were steady “but we’re not making significant inroads into unemployment”.

“We’re not seeing any significant turnaround in jobs growth either, so that just underlines the need for efforts to be put in place in the lead-up to the closure of the auto industry and to sustain Arrium, the closure of which would compound the unemployment challenges next year,” Professor Spoehr said.

A recent poll in the surrounding electorate of Grey showed Nick Xenophon Team candidate Andrew Broadfoot could defeat sitting Liberal MP Rowan Ramsey.

The unemployment rate in Grey — which covers Whyalla and much of the state’s north — was 7.7 per cent in December, according to research released today by the Australia Institute.