Questions over Labor’s $100m plan to save Arrium steelworks at Whyalla with operation to break even

QUESTIONS have been raised about Labor’s flagged $100m bailout of Whyalla’s steelworks, with the Arrium operation to break even this year without extra funding.

• Labor announces $100m to save Whyalla steelworks if elected
• 4000 SA jobs gone if Whyalla steelworks closes
• Another $200m needed to preserve Arrium
• Weatherill promises $50m to help save Arrium steelworks
• Arrium shareholders may launch class action

THE embattled Whyalla steelworks is set to break even this year even without Government funding.

Arrium has been under administration since April, with warnings 3500 jobs are on the line and the town on the brink of crisis. Premier Jay Weatherill has pledged $50 million, and Opposition Leader Bill Shorten has promised $100 million for a fund to improve the plant.

On Thursday Arrium administrator Mark Mentha said it was poised to break even thanks to cost cutting decisions.

But he said the taxpayer funds and financing arrangements were necessary to improve technology and efficiency to make Arrium a more viable business and therefore a better option for a potential buyer.

The mining side of the business will make a “slight profit”, he told FIVEAA.

Opposition Leader Bill Shorten with SA Premier Jay Weatherill at the steelworks in Whyalla on Thursday. Picture: Kym Smith

“This (Government) money will move the dial in making this business far more viable long term and therefore makes it a realistic long term proposition for a buyer,” he said.

The Government seized on Mr Mentha’s comments as ballast to their argument that there is time to do a thorough review of the company instead of throwing money at it.

Ministers used the opportunity to criticise Opposition Leader Bill Shorten’s plan.

A Labor Government, if elected, would ensure Arrium got $100 million in addition to the $50 million from the State Government.

That money would be half in grants and half from financing.

The plan is to create a fund, to which a future buyer of Arrium would add $150 million, for upgrades and improvements to the steelworks to improve their productivity and sustainability.

Prime Minister Malcolm Turnbull described the plan as “vague” and “highly political”. The Government is reviewing the company and possible options.

Industry Minister Christopher Pyne said there was a better way to help and that it was a “questionable policy” to give them taxpayer money.

Opposition Leader Bill Shorten visits OneSteel at Whyalla. Picture Kym Smith

“The idea that somehow Arrium is about to close and the Whyalla steelworks are about to close and there’ll be 3000 people put out of work is not a reality,” he said.

Finance Minister Mathias Cormann said their advice from KordaMentha was that “the Whyalla steelworks are not at any immediate risk and indeed that there are a number of purchasers lining up to purchase relevant business assets”.

Treasurer Scott Morrison told the ABC the business was able to continue to trade and that the Coalition was not going to “play politics” with the issue.

A Labor spokesman said that while Arrium had made “good progress”, there are “ongoing challenges”.

“In order for the current workforce to be secure and the business to grow, a long-term strategic approach is needed. This includes long-term investments which the company is just not in a position to make,” they said.

In South Australia, state Treasurer Tom Koutsantonis said that “Arrium’s financial results for this year have been impacted by the special rules that are in place due to the administration which provides debt relief and the ability to restructure long-term supply contracts”.