Whyalla steelmaker Arrium put into voluntary administration, with Grant Thornton appointed

WHYALLA steelmaker Arrium has been placed into voluntary administration, casting further doubts over the future of its 1000-strong workforce.

• Analysis: It’s not the end of the road, but it’s probably close
• Anger builds up in Whyalla as hundreds rally
• Months left to save a city, jobs

WHYALLA steelmaker Arrium has been placed into voluntary administration, casting further doubts over the future of its 1000-strong workforce.

Grant Thornton has been appointed as administrator, with an official announcement due this morning.

The development comes after trading of Arrium shares was suspended for up to a week while it devises a workable recapitalisation plan over its $2.8 billion debt.

This superseded a trading halt that was in place following the collapse on Monday of a $US927 million deal with US vulture fund GSO Capital.

Liberal Senator Sean Edwards, chair of a senate committee inquiry into the steel industry, said Arrium’s management must explain how its debt had been handled.

“It appears to me that Arrium’s fundamental business of mining ore and making steel remains sound albeit under pricing pressure, however, it is a company ultimately unable to manage its accrued debt,’’ he said.

Mr Edwards’s comments were backed by colleague Christopher Pyne.

“If there is anybody that needs to look at themselves, it’s the Arrium management, not the banks,” Mr Pyne said on Wednesday.

Among similar claims of financial mismanagement, chief financial officer Robert Bakewell departed on Wednesday to “pursue other interests”. It is widely expected that a number of other senior executives and company directors will follow.

Taking a different approach to his federal counterparts, SA Treasurer Tom Koutsantonis focused on Arrium’s lenders, particularly Australia’s big banks.

Treasurer Tom Koutsantonis speaks to the media in Whyalla. Photo Tom Huntley

Speaking from Whyalla and urging against panic, he said both levels of government would continue to propose possible rescue deals for Arrium’s OneSteel operations – but only if the banks don’t force its hand into voluntary administration.

“The banks are worried about their balance sheets – that’s completely normal and understandable,” he said.

“But I’m talking directly now to the Australian banks: put the national interest in front of your own. Do they really expect that a country such as Australia to import its own steel?”

Arrium’s chief executive of strategy, Naomi James, told the senate inquiry that margin – not volume – posed the biggest challenge to the business.

“We have seen steel prices in absolute terms reduce by 60 per cent in 2012, we have seen steel margins over scrap reduce by 80 per cent,” she said.

Representatives from leading industry body, the Steel Institute, said that a royal commission may be needed to ensure the survival of the strategically-important industry.

Mr Koutsantonis said the state and federal governments would continue to propose possible rescue deals for the OneSteel operations, but only if the banks didn’t force Arrium’s hand into voluntary administration.

“There is time. While this suspension is not good, it’s not the end (of Arrium),” he said.

“The Australian people are quite comfortable with the social license our banks have — they’re the most profitable in the world. But this industry is important than other industries.

“Without wanting to overplay it, Australia can’t be at the mercy of the rest in terms of structural steel. In times of a national emergency, we need that capability.

“It would be a national tragedy to see this company close.”

Local state MP Eddie Hughes said Whyalla is a resilient community, but its residents can only handle so much uncertainty.

Whyalla residents gather at the steps of the council building after marching from Wilson Park to show their support for the steal industry in their town. Photo Tom Huntley.

Mr Koutsantonis said it didn’t think the banks would be sad to see the back of Mr Bakewell.

He would not be drawn on the future of chief executive Andrew Roberts, saying only that the two had spoken on the phone that morning.

A community rally in Whyalla yesterday, organised by the unions, showcased some of the bubbling anger surrounding the fate of the region’s largest employer.

Treasurer Tom Koutsantonis speaks to the media in Whyalla. Photo Tom Huntley.

Family that’s deep in a hole

WHYALLA will become Australia’s “largest ghost town’’ if the town’s steelworks close down, according to acting mayor Tom Antonio.

“If the (steel) plant is closed, you’ve got to understand we could have the biggest ghost town in Australia,’’ he said.

It’s a fear echoed by OneSteel electrician Mat Eversen and his boilermaker father, Casey, who spent 40 years at the steelworks before being made redundant earlier this year, who believe the city will die without its main employer.

“We’ve had a few things thrown at us before, but nothing like this,” Mat says of the ever-darkening cloud of uncertainty hanging over the head of OneSteel owner, Arrium.

“It just keeps getting worse and worse.”

Mat and wife Dana want to remain in their home town, but there’s a possibility he will have to seek work elsewhere.

OneSteel electrican Mat Eversen with wife Dana and son Xavier, 3. Pic: Tom Huntley

Dana will remain living in town with their three-year-old son, Xavier.

“We’ll have to keep the house and pay the mortgage, because who’s going to buy a house where there’s no work,” Mat says.

“It’s hard not to, but I really don’t want to think about what will happen if the steelworks go under.’’

For Casey, it comes down to the very core of Australia’s national identity.

“There’s only so many holes we can dig around the country – we have to value-add,” he says. “Australia will just end up as one big hole.”

Originally published as Whyalla steelmaker Arrium put into voluntary administration, with Grant Thornton appointed