SA government working on Whyalla concerns as GFG Alliance faces financial challenges

Premier Peter Malinauskas says the government has “grave concern” about the financial challenges facing GFG Alliance in Whyalla and its ability to fund the steelworks’ future.

Premier Peter Malinauskas after announcing the Whyalla steel plant will be run on hydrogen fuel. Picture: GFG ALLIANCE/Brenton Edwards

Premier Peter Malinauskas says the government has “grave concern” about the financial challenges facing GFG Alliance in Whyalla and its ability to fund the steelworks’ future.

He told state parliament yesterday the Whyalla steelworks “represents a substantial policy challenge at the moment for the state and the country”, as owner GFG Alliance faced “very challenging circumstances financially at the moment”.

“And this is of grave concern to the South Australian government,” Mr Malinauskas said.

The government has been contemplating a suite of policy responses “or potential interventions which may or may not be needed”.

Premier Peter Malinauskas says the government has “grave concern” about the financial challenges facing GFG Alliance in Whyalla and its ability to fund the steelworks’ future. Picture: Brenton Edwards

It had been working on potential responses to the “challenges” through its Steel Taskforce since September last year, Mr Malinauskas said.

While the government remained committed to the $593m hydrogen jobs plan to fuel the steelworks green steel ambitions, Mr Malinauskas said this policy hinged on having a strong customer.

The best outcome for Whyalla was for GFG Alliance chief Sanjeev Gupta’s ambitions for the steelworks to be realised, he said, including the transformation to produce green iron or green steel.

However, he said “we are increasingly concerned about the capability of GFG to be able to invest the capital that is required to really realise that transformation”.

“We continue to work on this policy endeavour because making sure that we realise the full potential of everything that the Upper Spencer Gulf has before it remains a critical economic objective of the government,” he said.

Mr Malinauskas described the Hydrogen Jobs Plan as an “exceptionally complex project” and the project was located in Whyalla adjacent to the steelworks as it offered substantial opportunity in green iron production and future export opportunities.

The government’s bid to decarbonise industry and produce green steel through the hydrogen plan was also acknowledged by Energy Minister Tom Koutsantonis who said for the project to work, the government needed a partner.

“The hard part for us is that we have a partner who is currently not investing, they are not investing in Whyalla,” Mr Koutsantonis said.

“So there are countless numbers of contractors who remain unpaid. So there are a stream of promises that have been made to the people of South Australia… we want those promises to be fulfilled.”

But he said the state government would have the backs of the people of Whyalla and also was behind the steelworks as “Whyalla is too big to fail”.

He said the government was committed to steelmaking and wanted Whyalla to succeed.

“So what we are doing is laying out a framework to have a green steel industry in the south,” Mr Koutsantonis said.

Opposition leader Vincent Tarzia criticised the government saying it had failed to deliver on its promise to build a $593m hydrogen plant that it claimed “would be operational by sometime in 2025”.

“Well, you know what?” he said.

“We’re in 2025. Here we are in 2025 and barely a single shovel has been put in the ground… meanwhile, what’s the plan?”

He questioned the government’s continued commitment to the hydrogen project, citing companies and states throughout Australia who have been pulling back from investing in hydrogen.

“It all seems to be going one way, but not under this government,” Mr Tarzia said.

Originally published as SA government working on Whyalla concerns as GFG Alliance faces financial challenges