Latest news with #Whyalla
ABC News
5 days ago
- Business
- ABC News
Shoring up Australia's remaining industry an investment rather than bailout
As a nation, Australia often baffles the experts. We rank amongst the world's richest nations when it comes to personal wealth but, in terms of our economy and particularly its complexity, we sit amongst the world's poorest. It's a situation that is progressively getting worse. According to Harvard University's index of economic complexity, Australia now has one of the world's least complex economies, ranking at 105th out of 145 nations. We've now slipped behind Botswana but at least we're still beating Cote d'Ivoire. Less than a decade ago, we ranked at 93 which, in itself, was no great achievement. "Compared to a decade prior, Australia's economy has become less complex," the study found. The reason? "Australia's worsening complexity has been driven by a lack of diversification of exports." That's just in the past decade. But the devolution of the Australian economy began long ago. From the 1970s, Australia became a poster child for free market theory and globalisation, capitalising on our natural advantages as a global food supplier and using our abundance of natural resources to provide the world with raw materials. The end result? At just 5.1 per cent of GDP, we have the lowest level of manufacturing of all 37 nations in the OECD. Suddenly, that's no longer celebrated. The global mood has shifted to one of self-sufficiency instead of specialisation. Protectionism and withdrawal, led by the US, have replaced openness and co-operation. Whyalla, Port Pirie and possibly even Mount Isa. The imminent closure of each of these basic metal processors has spurred federal and state governments into action. Where once governments would have been happy to allow private enterprise to fail, they now are actively trying to salvage something from the wreckage. When the South Australian government pulled the rug from under Sanjeev Gupta's GFG Alliance earlier this year, putting the Whyalla steelworks into administration, the federal government stumped up $2.4 billion to keep the operation afloat. And this week, two state governments and the federal government rode to the rescue of Nyrstar and its ailing smelters in Hobart and Port Pirie with a $135 million lifeline. Meanwhile, shipbuilder Austal joined forces with a federal government offshoot to become the nation's preferred strategic naval shipbuilder. But reversing the long-term trend in our industrial decline will be no easy task. And should government be involved in directing funds towards bailing out failing industries? University of Technology Sydney economist Roy Green argues these examples shouldn't be seen as bailouts but rather future co-investments in processing technologies. "We, at the moment, have far too little invested in the value add of our unprocessed raw material exports, and a good case in point is lithium, where we produce 50 per cent of the world's production," he told ABC's The Business host Kirsten Aitken. "We export 90 per cent to China and we capture only 53 per cent of its value. "We can't do that with all the other metals and materials." He points to products like antimony, which commands between $30,000 and $40,000 a tonne, and rare earths like germanium, a key component for touchscreens. According to Green, the Nyrstar injection and the lifeline to Whyalla are likely to be the forerunners for what will be required in the future. "This is a down payment on the future, and the future is not a world of free markets," he said. The demise of Australia's automobile industry in 2017 was a defining moment in the national industrial make-up. Established in the post-war era, a time when protectionism ruled the global economy, the likes of Ford and GM were shielded by 45 per cent tariffs on imported cars, effectively rendering them out of reach for ordinary Australians. By 2005, however, the tariff had been cut to 10 per cent, and then it was halved just five years later. That coincided with the global financial crisis and the great Australian mining boom, which sent the Australian dollar into orbit. It eventually hit $US1.10, delivering Australians unrivalled global buying power. Imported cars flooded the market and rendered the three big local manufacturers — Ford, General Motors and Toyota — uneconomic, resulting in the loss of almost 400,000 jobs. The exit of all three had far-reaching effects. It accelerated the demise of industrial designers and tool makers, along with specialist engineering and electronics industries, and a range of other valuable skills necessary for a broad industrial base. It also coincided with a rapid lift in Australian energy prices as gas began being exported from the east coast, denuding local supplies and sending local energy-intensive industries to the wall. And for all the economic rationalist talk about comparative advantage, China's huge subsidies in heavy industry — including the capture of raw materials processing — made it the price maker when it came to almost every commodity except iron ore. Australian nickel production has all but shut in the past two years following Chinese interests turning Indonesia into the world's leading supplier and processor. China dominates rare earths refining and has total control of the all-important heavy rare earths sphere. It is the biggest player in most other industrial metals processing. "These are areas that are so heavily subsidised in China that if we don't match those subsidies, or at least pivot to future technologies so that we can do these processing operations more cheaply and cost effectively, we will be priced out of an area in which we are producing many of the materials that people want and yet we won't be processing them here," Green said. He argues that Australia no longer can rely upon comparative advantage but should instead create comparative advantage in value chains. Otherwise, he argues, China will be handed a monopoly in the metals and materials vital for the future.
Sky News AU
6 days ago
- Business
- Sky News AU
Saving thousands of local jobs amongst ‘most important' parts of Whyalla Steelworks sale, McKell Institute CEO says
Preserving thousands of local jobs and skills is one of the 'most important' aspects of the Whyalla Steelworks' potential sale, a thinktank leader has declared. BlueScope on Monday announced it was partnering with Japanese, Indian and Korean steelmakers to make a bid for the Whyalla Steelworks after it was forced into administration earlier this year. The steelworks, which employs 1,100 workers directly and supports an additional 2,000 in related industries, supplies 75 per cent of the country's structural steel and remains the only domestic producer of long steel products. Whyalla received a $2.4b government bailout package in February from the federal and South Australian governments after becoming "irredeemable" under British billionaire Sanjeev Gupta's company, GFG Alliance. About $500 million was set aside for transforming Whyalla into a green steel powerhouse. The McKell Institute's chief executive Edward Cavanough said maintaining the Whyalla Steelworks and the local industry surrounding it was critical for ensuring Australia's green steel future. 'The fact is we can't get to a green steel future if we lose the Whyalla plant in the first place,' Mr Cavanough told Business Now. 'You're not going to be able to recreate that out of thin air. 'The most important thing initially is preserving what is there, recapitalising the plant so it's actually sustainable and making sure that the skills in Whyalla aren't lost. 'If we lose all of those then there's certainly no hope for a green steel future, let alone any steel future.' He also stressed the expression of interest from the consortium, which featured major international steel makers, was a 'really positive step' for the steelworks. 'It was a really big risk by the government to intervene earlier in the year,' Mr Cavanough said. 'I think the fact that we have the likes of BlueScope putting their hand up and saying there is a future here is really, really positive.' BlueScope is joined by Japan's Nippon Steel, Indian multinational JSW Steel and Korea's POSCO in its bid to snap up Whyalla and turn it into a green steel maker. BlueScope told the ASX on Monday: 'The consortium has identified Whyalla as a prospective location for future production of lower emissions iron in Australia for both domestic and export markets, with the potential to play an important role in the decarbonisation of the global steelmaking industry." KordaMentha, an Asia-Pacific advisory firm, was appointed as the steel mill's administrator after the government forced its shutdown. The plant has been plagued with issues including frequent shutdowns of its coal-fired blast furnace, delays in necessary upgrades, and a lack of stable financial backing. The company owed tens of millions of dollars in unpaid royalties to the SA government and an additional $15 million to SA Water. Mr Gupta purchased the plant for $700m in 2017 with ambitions to transform it into a green steel plant by using hydrogen. The BlueScope-led consortium revealing its interest in acquiring Whyalla about six months after its forced administration comes as a relief for many as it originally took 17 months for Mr Gupta to purchase it.
AU Financial Review
04-08-2025
- Business
- AU Financial Review
‘Formidable' Whyalla bid could mean more government cash
BlueScope Steel investors have backed the high-powered consortium it is leading to buy the struggling Whyalla steelworks, saying it is well-placed to secure significant taxpayer funding above the $2.4 billion the Albanese government has already committed to keeping the plant operating. The world's third-largest steelmaker confirmed reports in The Australian Financial Review that it was exploring a bid for the steelworks – owned by British industrialist Sanjeev Gupta until officials in South Australia stepped in and appointed administrators earlier this year – with Japan's Nippon Steel, South Korea's POSCO and India's JSW Group.
ABC News
04-08-2025
- Business
- ABC News
BlueScope to lead international consortium in bid for Whyalla steelworks
BlueScope Steel has confirmed its status as a frontrunner to take over the Whyalla steelworks, forming a consortium with three other international steelmaking corporations interested in purchasing the industrial facility. After expressions of interest for the steelworks closed last week, BlueScope revealed to the stock exchange on Monday that it was leading a consortium that included Japan's Nippon Steel, India's JSW Steel, and South Korea's POSCO. The group, which according to BlueScope has a combined market capitalisation of $115 billion, has submitted a non-binding expression of interest for the Whyalla steelworks. "The consortium has identified Whyalla as a prospective location for future production of lower emissions iron in Australia for both domestic and export markets, with the potential to play an important role in the decarbonisation of the global steelmaking industry," BlueScope said in a statement. "Should the consortium be invited to participate in the next phase of the sale process, the consortium will jointly conduct due diligence and engage with the South Australian and Federal governments regarding the announced funding support to maintain a sustainable steel industry in the region." BlueScope added that any offer to acquire the steelworks would be subject to "hurdles", including due diligence and other considerations around return on investment for consortium members. Nippon, POSCO and JSW are among the biggest steel companies in the world, ranking 4th, 8th and 12th respectively for total steel production in 2024, according to the World Steel Association. Energy and Mining Minister Tom Koutsantonis said the consortium's interest in the steelworks was "great news". "Seeing consortiums like this put their hands up — the prestige behind it, the expertise, the deep pockets, the long-term thinking — is really encouraging." More than 15 national and international parties have passed the final expression of interest stage for the steelworks, according to the government. The state government placed the Whyalla steelworks into administration in February, stripping ownership of the plant from British industrialist Sanjeev Gupta's GFG Alliance. The plant has since been in the hands of administrators KordaMentha, which have been receiving expert advice from BlueScope on the steelworks' operations. The state and federal governments have allocated $659 million to keeping the steelworks afloat through administration. A further $1.9 billion is on the table to help the next steelworks owner decarbonise the facility and transition to green iron and green steelmaking. Mr Koutsantonis reiterated the state government's expectation that a sale would not be finalised until the second half of 2026. "It's not time to pop the champagne corks just yet," he said. "But we are on the right track, and we are meeting the milestones we hoped to meet." While the state government's confidence about Whyalla is growing, there is still doubt in the Spencer Gulf about another major employer. The Port Pirie lead smelter, which employs about 900 people, is losing tens of millions of dollars a month, according to owner Nyrstar Australia. The company has been publicly and privately lobbying for government help to protect its smelting operations in Port Pirie and Hobart, which it said have become uneconomical due to "market distortion" form China. State cabinet is travelling to Port Pirie for a community meeting on Monday night, fuelling hopes for a support package announcement. "What I would expect to see there, is we would have some answers in regards to Nyrstar," Port Pirie Mayor Leon Stephens said, adding that he had not been briefed on any funding announcement. Cr Stephens, who is also running as a Liberal Party candidate at next year's state election, said the Port Pirie community needs surety about its future. "The government's very tight-lipped on it," he said. Premier Peter Malinauskas said on Monday a funding deal was "hopefully very close", but technical details were still being worked through. He said the state government "is willing to invest" provided the money sets the smelter up for the future and protects local jobs. "We accept, and it's undeniable, that Nyrstar is facing challenges not of its own making." If Port Pirie's lead smelter were to close, the city could lose 2,000 people, according to a report released on Monday by progressive think tank The McKell Institute. That accounts for more than 11 per cent of the city's nearly 14,000 residents, the institute said. The report recommended the federal government consider taking equity stakes in struggling refineries and boost local demand for critical minerals. McKell Institute CEO Ed Cavanough said the problem requires a coordinated national strategy, rather than repeat bailouts. "We can't have a situation where every six months there's a new smelting operation that comes under threat and there's sort of a bespoke package each time," he told ABC Radio Adelaide. "We don't want to create a precedent where in the future, investors or others come in and purchase assets and sort of intentionally let them go adrift waiting for a government bailout. "What we want to see is a cohesive, national coordinated strategy for the entire sector."
The Guardian
04-08-2025
- Business
- The Guardian
Global consortium led by Australia's BlueScope weighs takeover of embattled Whyalla steelworks
Australia's largest steelmaker, BlueScope, is part of an international consortium considering a takeover of the embattled Whyalla steelworks, which was stripped from the control of British industrialist Sanjeev Gupta earlier this year. A consortium consisting of the Australian steelmaker, Japan's Nippon Steel, Indian company JSW Steel and South Korean manufacturer POSCO, has submitted a non-binding expression of interest in the South Australian steelworks, BlueScope told shareholders on Monday. 'Any decision to make an offer to acquire and develop expanded operations at Whyalla would be subject to due diligence and the consortium members' return on investment hurdles,' BlueScope said in a statement. Sign up: AU Breaking News email 'The consortium has identified Whyalla as a prospective location for future production of lower emissions iron in Australia for both domestic and export markets, with the potential to play an important role in the decarbonisation of the global steelmaking industry.' POSCO led a 2017 bid to take over Whyalla, but was outbid by Gupta. BlueScope, which operates the Port Kembla steelworks south of Sydney, said there was no obligation to turn the consortium's expression of interest into a formal bid. Whyalla is one of only two major integrated steel projects in Australia and the only local manufacturer of rail. It is seen as a highly sensitive project, politically, given the steelworks is a major employer in a regional city creating a product not made anywhere else in Australia. Earlier in 2025, the steelworks received a $2.4bn state and federal government bailout package to help keep it afloat and save jobs, after the South Australian government removed control from Gupta's GFG Alliance amid mounting debts. GFG had pledged to decarbonise the plant, which included a plan to use renewable energy-produced hydrogen in the manufacturing process to make sought-after green steel. But the promised investment never arrived. When administrators were appointed in February, the steelworks was found to have racked up more than $1.3bn in debts, including unpaid employee entitlements. A GFG spokesperson said at the time the operation faced 'significant operational and financial challenges' due to external and internal factors. Many of the financial problems facing Gupta's global steel empire are linked to the 2021 collapse of its primary financier Greensill Capital, an event that rattled his global steel-making businesses, which include operations in the UK, continental Europe and the US. The SA premier, Peter Malinauskas, said on Monday that more than 15 national and international parties had passed the final expression-of-interest phase in a positive sign for the steelmaker's transition to new ownership. The sales adviser will now solicit indicative bids from shortlisted parties that expressed interest, with no preferred bidder at this stage. 'The state government's objective has been to transition the ownership of the steelworks to a new credible owner who can invest in Whyalla's future,' Malinauskas said in a statement. 'This strong interest is a positive sign for the future of the Whyalla steelworks and for the future of sovereign steelmaking capability in Australia.'
