Whyalla contractors will have access to an emergency $50m as part of a $2.4bn rescue package

Businesses owed money by the Whyalla steelworks will have access to an emergency $50m rescue fund, while GFG Alliance entities owed money will be blocked from accessing it.

Businesses owed money by the Whyalla steelworks will have access to an emergency $50m fund to ensure their survival, while entities associated with the steelworks’ former owner GFG Alliance will be expressly excluded from the rescue package.

Anthony Albanese and South Australian Premier Peter Malinauskas toured the steelworks on Thursday morning after the state government took the extraordinary step of forcing its owner, GFG subsidiary OneSteel Manufacturing, into administration on Wednesday.

Prime Minister Anthony Albanese (second right) and South Australian Premier Peter Malinauskas (second left) pose for a photograph with workers inside the Whyalla steelworks in Whyalla.

The pair unveiled a $2.4bn rescue package for the steelworks, which is designed to keep it operating and pay creditors in the short term, and over the longer term underpin a multi-billion dollar investment to transition the steelworks to a decarbonised “green steel” operation.

Mr Albanese said Australia’s industrial fragility had been thrown into sharp relief by global events such as the pandemic, and Thursday’s announcements were about securing a manufacturing future for Australia.

“We make bugger all here,’’ he said on Thursday, after sheeting home the blame for car manufacturing leaving Australian shores to previous federal Liberal governments.

“We can’t just be on the end of supply chains, we can’t just dig things up,’’ Mr Albanese said.

“There’s no industry that is more important for Australia than steelmaking.

“This is the heart of this area in Whyalla, but the arteries spread out right around the country.

“Jobs in construction, jobs in railways, in the new airport in Sydney.”

The rescue package is made up of three parts, with an immediate $100m including $50m for creditor assistance payments, $32.6m for urgent infrastructure upgrades and $6m for a jobs matching and skills hub.

Mr Malinauskas said creditors owed between $5000 and $1m could apply for emergency assistance and receive 50 per cent of the money they were owed immediately.

The government will pay creditors owed up to $5m all of what they are owed, however if creditors receive a dividend from the administration process in the fuure, that would be paid back to the government.

He was adamant that no entities associated with Mr Gupta’s GFG Alliance – the former owner of the steelworks – would get any payments under the scheme.

“There is no bailout here of GFG,’’ he said.

SA Premier Peter Malinauskas talking with Whyalla steel work workers. Picture: Tim Joy

The second tranche of funding, $384m, will be used to fund the operations of the steelworks while it is in administration, ensuring workers and contractors continue to be paid.

Longer-term $1.9bn will be set aside, with Mr Albanese saying the governments would be going “dollar for dollar” to invest in the future of the steelworks.

“The State and Federal governments will work with a new owner to invest in the upgrades and new infrastructure which will be vital to ensuring the steelworks has a sustainable, long-term future,’’ the two governments said in a joint press release.

Mr Albanese could not give details on how that funding – with $500m to come from a new $1bn green iron investment fund – would work, saying “we’ll work those issues through’’.

A joint task force will also be set up “to provide advice and expertise in the transition to a sustainable future’’.

“The Commonwealth Government has earmarked up to $500m of the Green Iron Investment Fund to support the longer term transformation of the steelworks,’’ the Albanese government said.

“It will also make available substantial additional financing to partner with a future owner and operator to upgrade the facility and ensure a green steel future for Whyalla and South Australia.

“The South Australian government’s share will come from funding set aside for the Hydrogen Jobs Plan, which will now be deferred to prioritise securing the steelworks, as well as $50m from the Whyalla Steelworks Operational Efficiency Improvements Fund.”

Mr Malinauskas said his government remained committed to its hydrogen jobs plan, centred around a proposed hydrogen plant at Whyalla.

While that project has been deferred from its earlier proposed start date of early next year, Mr Malinauskas said on Thursday hydrogen was key to the decarbonisation of the steelmaking process longer term.

The Australian Workers’ Union, the Australian Manufacturing Workers’ Union, the Electrical Trades Union and the Maritime Union of Australia put out a joint statement on Thursday welcoming the goverments’ intervention.

“Workers should never have been sweating on shutdowns and closures as the boss dodged suppliers, sent profits offshore, ran the plant down and never delivered on promises to invest,’’ the said.

“This package allows them to get back to the business of making the steel this country depends on.It can also set the plant up for a bright future - transforming steelmaking on the Eyre Peninsula from laggard to world leader.

“GFG’s neglect may have made it hard for some to see, but the plant has all the key ingredients to spearhead the shift to clean green steelmaking: access to magnetite ore, gas, hydrogen and renewables, plus decades of experience and industrial knowhow.’’

Mr Gupta sent a memo to senior staff overnight saying the decision to put the steelworks into administration was in his opinion, the “wrong” decision, but said it would allow GFG to focus on its other businesses such as InfraBuild and Tahmoor coal, without the burden of the loss-making Whyalla operations.

Originally published as Whyalla contractors will have access to an emergency $50m as part of a $2.4bn rescue package