Relief for Whyalla businesses as steelworks creditors roll in

The funding support tap is opening in Whyalla, with payments from the state and federal government’s $2.4bn rescue package expected to land in bank accounts this week.

• Gupta’s $500m claim
• Gupta’s directors seek safe harbour

The Whyalla steelworks was reportedly losing $1.5m a day and bled $319m in seven months before the state government’s lightning move to take control, stem the losses and find relief for cash-strapped creditors who are now seeking to have debts paid.

David Bruce’s relief was palpable as his general manager walked into the Whyalla Hose and Fitting Services workshop and handed over the paperwork approving payment for half the $600,000 debt his business desperately needs to operate.

The payment from the state and federal government’s $2.4bn Whyalla rescue package will keep all 15 of his staff on the payroll after “trading off fumes on the bank balance”.

“We had to take out a $750,000 loan after the last bailout of the Whyalla Steelworks and we’d really just paid that off and then the steelworks stopped paying in late September last year,” Mr Bruce said about the business he started in 1994.

Hundreds of bills started piling up and if other companies operating in the Spencer Gulf region like Nystar and Viterra had not stepped in to offer new work, Mr Bruce’s business faced an uncertain future.

David Bruce (far left) with Maurice Dry Cleaning owner Chrys Press, Chris Birch from CBCH/Max Crane, Whyalla Hose and Fitting Services general manager Jarrod Starkey and the paperwork from the government showing a 50 per cent payment of invoices will be made. Picture: Brett Hartwig

“We were starting to get worried, it’s not easy,” he said.

Now Mr Bruce, like other key business leaders in the town, wants to move forward, grateful that the governments and receiver KordaMentha are “moving at warp speed” to get the steelworks and mines back in operation.

“GFG Alliance are in the rear view mirror now and they seem to be getting further and further away.”

Today Premier Peter Malinauskas is also in Whyalla to attend the first creditors’ meeting at the Westland Hotel Motel after the state government pushed GFG Alliance’s OneSteel Manufacturing into administration, appointing KordaMentha.

He declared the funding support tap was opening with payments including those focused on creditors receiving 50 per cent of unpaid bills initially expected to land in bank accounts this week.

Premier Peter Malinauskas visits Whyalla Hose and Fitting Services and shakes hands with supervisor, fitter and turner Luke Spry. Picture: Brett Hartwig

Whyalla Port was also back in business delivering goods to market after ships were stranded in the harbour as its contract operators stopped work over OneSteel Manufacturing’s unpaid bills, he confirmed.

Peak Iron Mines was one company severely impacted at the port – with buyers of its ore exports potentially affected to the tune of millions of dollars – before KordaMentha stepped in to pay bills and get operations happening.

“We had 200 direct SA jobs at risk,” general manager of sustainability and corporate services Diona Antonas said about exports from its Peculiar Knob operation, 120km south east of Coober Pedy.

Chris Birch shared the same relief, saying his company CBCH/Max Cranes Whyalla is one of the town’s largest employers with about 70 staff, 30 cranes and $600,000 in unpaid bills from OneSteel Manufacturing.

Chris Birch from CBCH/Max Cranes (far left) with Whyalla Hose and Fitting Services general manager Jarrod Starkey, Maurice Dry Cleaning owner Chrys Press and Whyalla Hose and Fitting Services director David Bruce. Picture: Brett Hartwig

“It was coming to a head,” Mr Birch said, adding that the impact of unpaid bills for work at the steelworks and mine was seeing contract jobs “being canned because the supply chain was starting to be affected”.

“Things are already moving forward with the supply chain now getting reinstated and on the weekend the (steelworks) plant started to gear up to full capacity back with parts they needed. It’s moving very quickly.”

Right throughout the industrial estate in the centre of Whyalla are the signs of businesses severely affected by the challenges facing the Whyalla Steelworks and mines, some with gates locked shut and others running at low capacity.

One business owner has been in Adelaide working extra contracts to keep the home business operating and Maaric Industrial Services owner Chrys Press said many workers laid off from the businesses in town or the steelworks had already moved interstate to find new work.

The Whyalla business owners and managers are relieved a 50 per cent payment of invoices will be made. Picture: Brett Hartwig

Mr Press lost about 80 per cent of work through the industrial dry cleaning services side of his own business as the steelworks began to struggle and is owed about $50,000.

However he said news of support has immediately lifted the mood in town, the community’s focus on conversations led by worried talk of the city’s future now turning around.

“A few people that I know who train at the same gym as me, they were heading off and now they are going to stick around and see what happens, but sadly there are a lot already gone,” he said.

“But there’s an uplift, people have something else to talk about rather than just negative stuff.”

For Jim Watson the help arrived about three weeks too late.

His business Metric Consulting Engineers that has operated in Whyalla since 2012 went into liquidation putting 17 staff out of work on February 5.

“Whyalla is one of the best places in SA to raise kids … it’s been tough but what this has done, glass half full, is it’s actually brought people together,” Mr Watson said.

He is staying put and working to reopen his business.

“We have restructured, purchased back assets from the liquidator and we plan to get our people back in the door.”

Originally published as Relief for Whyalla businesses as steelworks creditors roll in