A deep breath as town’s heart takes stock

Whyalla has had the last rites read to it more than any city, so much so that its residents regard the latest predictions of its demise with rehearsed determination.

Alicia and Thomas Wilson with daughter Charlotte, who are dependent on the ongoing viability of the steelworks and mine at Whyalla. Picture: Morgan Sette

Whyalla is the mock execution capital of the nation. It’s had the last rites read to it more than any city, so much so that the 22,000 residents of this nuggety South Australian steel town regard the latest predictions of its demise with rehearsed determination.

Whyalla was meant to die four times in the past four decades. First through the closure of its once-bustling shipyard in 1978, then the sudden withdrawal of BHP in 1999 as The Big Australian pulled out of the town it had called home for more than a century.

After the 2010 election, Liberal leader Tony Abbott famously predicted Whyalla would be “wiped off the map” by Julia Gillard’s introduction of a carbon tax. In 2016, it was the collapse of steel and mining giant Arrium that forced the axing of 900 jobs and predictions of an end to steelmaking.

Now the city faces its fifth existential threat: the $6.5bn cashflow crisis threatening to engulf Arrium’s saviour, GFG alliance mining magnate Sanjeev Gupta.

“We’ve had plenty of practice at this,” 34-year-old Whyalla florist Alicia Wilson says.

“It’s obviously pretty nerve-racking for people and you get to the point where you think, far out, what’s going to happen to us next?

“But we have been through it so many times before. This is a tough town. We’ve always found a way to come through.”

Ms Wilson and her husband Thomas are emblematic of the families that call Whyalla home. Their entire life is dependent on the ongoing viability of the steelworks and mine. If the steelworks went under, imperilling the mine that sustains it, the Wilsons and their three-year-old daughter, Charlotte, would be forced to pack up and leave, as would thousands more.

Mr Wilson is a 29-year-old digger driver at the Simec mine and works week-on, week-off excavating the hematite and magnetite iron ore that is found in the nearby South Middleback Ranges. These base materials are turned into more than 90 grades of steel at the Whyalla steelworks for use in rail and construction.

From a total workforce in Whyalla of about 10,000 people, roughly 2500 work at the mine and steelworks. One in four workers prop up the entire economy for the rest of the city.

“Everyone in town has skin in the game,” Mr Wilson says while enjoying an off-day at home with his wife and daughter.

“The worrying thing is that we are obviously so reliant on the steelworks and the mines that if anything did happen it really would spell the end. But as things stand none of us can see that happening. Even if Gupta had to sell, he is not just going to close the doors and walk away. For now we are just getting on like it’s business as usual. The ore price is around $US160 a tonne at the moment and things are chugging along, so everyone at work is saying ‘just ­ignore it. We’ll get through’.”

Whyalla is the biggest and most populous of the three working-class cities that make up what’s known as South Australia’s Iron Triangle, perched at the top of Spencer Gulf at the gateway to the outback. Each of these cities has done it particularly tough over the past five years, with the 2016 closure of the coal-fired Northern Power Station in Port Augusta costing 450 jobs, and the Nyrstar lead smelter in Port Pirie shedding 100 jobs in 2018 despite a $291m state government guarantee amid concerns over its debt levels.

The focus has now shifted to Whyalla, but this time, the crisis at GFG does not involve the commercial viability of the steelworks or the mines it relies on. Locals say the past 12 months have been promising for Whyalla. This is simply a question of cashflow, as Gupta tries to cushion his worldwide operations and 7000 Australian jobs — 1200 of them in Whyalla — as former Bundaberg billionaire Lex Greensill’s eponymous global finance company is plunged into administration.

Whyalla has always been a Labor town and its local member, Eddie Hughes, like many of his townsfolk hails from a third-generation steel-working family. He worked for Arrium before winning the seat of Giles for Labor at the 2014 state election.

He says the predictions of GFG’s demise are overstated and that the business model implemented by Mr Gupta has been working well. But he warns that neither the federal nor state government can sit back and hope that the company can resolve its ­financing challenges itself, and must have a Plan B at the ready in the event that the company is caught short.

“There have been a lot of positive signs in Whyalla,” Mr Hughes says. “There’s cashflow, all the order books are full. When you look at the businesses they are all doing well.

Liberal leader Tony Abbott famously predicted Whyalla would be ‘wiped off the map’ by Julia Gillard’s introduction of a carbon tax.. Picture: Morgan Sette

“But we can’t be blase about this. This is the only integrated steelworks in Australia that produces structural steel and rail. It’s an essential element of our sovereign manufacturing capacity. It would be madness to see this go out the door.

“There is a role for state and federal government in partnership with the private sector given what is at stake.

“It’s not just for the jobs in the local community that are contingent on the steelworks, but for the nation as a whole.”

Mr Hughes points to the precedent set by the former state Labor government with Nyrstar in providing state government money to guarantee the ongoing viability of the lead smelter in Port Pirie. “It is hugely important not just for the nation but specifically for Whyalla that we keep this going,” he says.

“We are not only talking about a quarter of the workforce, but the quarter of the workforce that underpins everything else. The steelworks and the mines are the beating economic heart of this community. The reliance is ­incredibly strong and that’s why it is so important for our community that all parties work together to get a good outcome here.

“We have got all the resources here, we have got millions of tonnes of magnetite on our doorstep, we have got massive energy ­resources and a skilled workforce. If we can’t pull all of those elements together to provide a long-term future for a viable steel industry in Australia, then we are not trying.”

Premier Steven Marshall reassured the people of Whyalla this week that he had been talking with Mr Gupta, who said he was confident that he had the cashflow to keep GFG and the rest of his operations going.

“We were assured by Mr Gupta that the immediate cash requirement to continue operating here in South Australia is secure,” Mr Marshall said. “But obviously there now needs to be a longer-term restructuring of their debt finance.

“Certainly, Sanjeev Gupta was sounding very optimistic.”

Back at Ms Wilson’s florist and gift shop at the Westland Shopping Centre, the young mother says she hopes the Premier is correct. “It has felt like things have been going well here, people have been buying plenty of flowers and that’s the type of luxury item that doesn’t sell when a community is doing it tough,” she says.

“But we need the steelworks to keep working. Without it we would lose so many families that I doubt there would be much of a town left at all.”