The timeline to build a new electric arc furnace at Whyalla’s steelworks has blown out to 2027

Sanjeev Gupta’s Whyalla steelworks won’t be producing steel from a new electric arc furnace until 2027 at the earliest, after earlier claims the project would be finished next year.

GFG Alliance executive chairman Sanjeev Gupta at the Whyalla steelworks.

The Whyalla steelworks, which is a key plank in the federal government’s ambition to become a green manufacturing powerhouse, won’t have its new electric arc furnace online until at least 2027 – two years later than forecast.

If the company keeps to that new timeline – pushed out from last year’s forecast to be making steel with a new electric arc furnace (EAF) by 2025 – it will mark a decade since British industrialist Sanjeev Gupta bought the plant out of receivership in 2017.

That purchase, by Liberty Primary Metals Australia – a subsidiary of Mr Gupta’s global GFG Alliance group – was followed by a series of major announcements from Mr Gupta, many at a “Big Reveal” held in Whyalla in 2018, and attended by then-prime minister Scott Morrison and other high profile guests.

Mr Gupta initially said the company would conduct a 6-12 month feasibility study on a “next-gen, mega-steel” plant, capable of pumping out 10 million tonnes of steel per year, $600m in upgrades to the current steelworks, and build out $US1bn, or one gigawatt of solar resources in the region.

This was later increased to 10GW of renewable energy, while plans for a copper smelter in the region and electric car manufacturing in Adelaide were also floated.

Outside of some upgrades to the steelworks over the years and a modest amount of solar energy installed, none of these plans have come to fruition.

Details of the EAF plan were fleshed out in April last year, when Liberty said it would have it operational by 2025, reducing its carbon emissions from steelmaking by 90 per cent.

Liberty said it would achieve a “90 per cent reduction in direct CO2 emissions from steelmaking expected by 2025, aligned with the aims of the federal Government’s Safeguard Mechanism”.

“The installation of the electric arc furnace and associated infrastructure is an investment project that will be funded by the business with an application to be made to the (South Australian government’s) Whyalla Steel Taskforce for a $50m grant that was committed and funded by the South Australian government in 2016 to be used towards this investment, pending approvals,” Liberty said in its announcement last year. That grant is contingent upon the plant being commissioned.

“Engineering work is already advanced and construction is expected to be completed in 2025 replacing the existing coke ovens and blast furnace,” Liberty said.

The federal government came to the party in January this year, committing $63.2m to the purchase of the EAF under its Powering the Regions Fund.

Minister for Climate Change and Energy Chris Bowen said at the time that the investment “is about securing the long-term future of the steel industry in Australia’’.

“As we undergo the transformation to Net Zero it is vital that we support our industries to adopt and manufacture cleaner technologies,” Mr Bowen said.

The steelworks is also seen as a key customer for the South Australian State Government’s hydrogen ambitions, with a $593m hydrogen hub – which would be among the largest in the world – also planned for construction at Whyalla.

However an update on Wednesday on the technical testing of Whyalla ore to be used in the new arc furnace let slip that the timeline for a combined direct-reduced iron, electric arc furnace (DRI-EAF) had slipped to 2027.

Liberty said on Wednesday that testing of Whyalla’s magnetite iron ore at facilities in Egypt and Canada had been successful.

“These results come as Liberty finalises the design of its integrated hydrogen direct reduced iron-electric arc furnace green steel plant in Whyalla, which is set to be operational in 2027,” the announcement on Wednesday says.

A Liberty spokeswoman confirmed that 2027 is the new timeline for steel production from the electric arc furnace.

It is understood the timeline slippage is due to the company assessing a combined process, rather than separate DRI and EAF designs.

“Liberty is making progress on the final design of its DRI-EAF industrial complex in Whyalla,” the announcement on Wednesday goes on to say.

“Collaborating with leading equipment manufacturer Danieli, Liberty plans to install a cutting-edge electric arc furnace equipped with Q-One technology, allowing for a direct feed from renewable energy sources to melt scrap and DRI, a groundbreaking innovation.”

The significant timeline slippage comes as Whyalla’s coal-fired blast furnace has been offline for several weeks, with steelworks staff now on reduced hours.

The works came after the furnace cooled too much during a two-day maintenance shutdown in mid-March, which caused blockages within the furnace’s wind tuyeres.

A further delay was announced last week after the blast furnace shell was damaged during repair works.

South Australia’s Energy and Mining Minister Tom Koutsantonis said on Wednesday the government was pleased that GFG remained committed to building the new EAF.

“While the timing of completion is slightly later than previously flagged, it highlights the importance of getting the existing blast furnace repaired and back up and operating as quickly as possible.

The State Government has offered GFG Alliance any government expertise or technical assistance that they may need and we continue to maintain a constant dialogue.

But in the meantime, I appreciate the impact this has on the take-home pay of affected workers.

We are seeking an independent assessment of the current damage through the Steel Task Force and have sought further information from the company about the current maintenance regime.

It is important to have certainty both in terms of the current operations and future plans, which is why I am this week travelling to Italy to speak to Danieli myself about the electric arc furnace project and to tour their facilities in Buttrio.”

Mr Gupta’s global suite of companies narrowly avoided collapse when financier Greensill failed in 2021.

Originally published as The timeline to build a new electric arc furnace at Whyalla’s steelworks has blown out to 2027