Subs build in South Australia may boost steel survival hope of Arrium

EARLY in Tuesday’s Future Submarines press conference, Prime Minister Malcolm Turnbull used the term “Australian steel” three times. Could this mean a lifeline for Arrium?

The call to use “Australian steel” on the submarine build in South Australia may offer a glimmer of hope for the survival of Arrium’s steelworks. Picture: Calum Robertson

• $50bn Future Submarines to be built at Osborne in Adelaide by French firm DCNS
• South Australia Premier Jay Weatherill says decision to build 12 French-designed submarines in Adelaide will kickstart jobs ‘immediately’
• Adelaide at heart of all major naval shipbuilding acquisitions for decades to come
• Federal Government takes action against dumped Chinese steel products to protect Whyalla steelmaker Arrium from unfair competition
• Administrator calls on big four banks for another $200m to preserve Arrium

WITHIN the opening minute or two of Tuesday’s Future Submarines press conference, Prime Minister Malcolm Turnbull used the term “Australian steel” three times. Defence Minister Marise Payne and Industry Minister Christopher Pyne followed suit soon after.

Although “Whyalla steel” was carefully avoided, the inference is that a local submarine build — together with offshore patrol vessels and future frigates — increases the survival chances of Arrium’s loss-making steelworks, which are now under the administration of KordaMentha.

“The characteristics of the steel that will be required (for the Future Submarines) will obviously await the completion of the design process, but our commitment is that that steel will be made ...(it) will be Australian steel,” Mr Turnbull said.

It’s a similar story for the offshore patrol vessels and future frigates.

Last week, Arrium administrator Mark Mentha expressed a strong interest in supplying steel to Australia’s future naval vessels.

Both Prime Minister Malcolm Turnbull and Defence Minister Marise Payne mentioned use of “Australian steel” at Tuesday’s Future Submarines press conference. Picture: AAP

But for this to occur a significant capital investment — the cost of which no one is willing to estimate — must be made to modernise South Australia’s steelmaking capabilities.

At present, Whyalla is simply incapable of producing the vast majority of steel required for each of the multi-billion dollar projects.

On this point, Australian Workers’ Union national secretary Scott McDine is calling for a three-way co-investment strategy involving the federal and state governments, plus the steelworks’ operator.

However, he would not be drawn on the level of investment required, saying instead that the Federal Government needs to put its cards on the table so other parties know what might be required.

“If upgrades are required to steelworks in Australia then we should know about them now,” he said.

With the federal budget less than a week away, he may get his wish soon.

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