Why the fate of Whyalla’s steelworks could hinge on its aging furnace

Why the fate of Whyalla’s steelworks could hinge on its aging furnace
  • PublishedMay 12, 2024

South Australians, particularly residents in the state’s Upper Spencer Gulf, have legitimate reasons to be concerned about what’s happening in Whyalla.

The state government certainly is.

The blast furnace at the heart of Australia’s last structural steel-making factory hasn’t run since mid-March.

The nearly 60-year-old furnace was taken offline for 48 hours of maintenance and has not come back up to working temperature since.

On Wednesday, the owner of the steelworks, GFG Alliance, revealed the shell of the furnace had been damaged in the process of trying to restart it.

Even before that problem, plant manager Tony Swiericzuk told ABC News it would be “weeks” before production would resume.

Tony Swiericzuk 2024-05-03 09:05:00
Tony Swiericzuk says some contracts have been adjusted until the plant is back operating.(ABC News: Che Chorley)

The company is adamant the shell damage is repairable but warns the restart date for the furnace is set to be pushed back.

It’s also turned to bringing in steel billet to help fill customer orders.

So the uncertainty local residents have dealt with for the better part of two months is poised to linger into winter.

“It’s hard. I’m not going to lie,” Australian Workers’ Union SA branch organiser Shane Karger told ABC News on Thursday.

“It’s another kick in the guts to the workforce that have been striving for years to keep this place going.”

Mr Swiericzuk says the steelworks operation directly employs about 1,100 people and is updating workers at daily forums.

Many staff have had their shifts cut and their pay packets drop by up to 30 per cent.

But then there are the contractors and labour hire companies which are also impacted, let alone the flow on effects to other businesses in the city and broader region with people having less money than usual.

SA Energy and Mining Minister Tom Koutsantonis says the government holds “grave concerns” about the current situation.

He knows a thing or two about Whyalla and its steelworks.

Mr Koutsantonis had the same portfolios when previous owner and steelmaker Arrium plunged into administration in April 2016.

A man wearing a hard hat looks.
Tom Koutsantonis is sending a team of experts to Whyalla.(ABC News: Che Chorley)

“This blast furnace needs to survive,” he told ABC News on Wednesday.

The state government has political skin in the plant and its future.

It is dispatching its own experts to have a look at what’s going on with the damaged blast furnace.

“The question for us is to make sure that the regular maintenance has been done, to make sure that the money that needs to be invested has been invested,” Mr Koutsantonis said.

“The government’s entire strategy in Whyalla has always been about keeping that blast furnace hot, and that blast furnace has to stay hot and continue making steel.”

The government is in the midst of rolling out what it calls its State Prosperity Project.

Part of that is a near $600 million taxpayer-funded hydrogen plant which is about to be constructed outside of Whyalla.

An artist impression of a hydrogen power plant with white buildings
An artist impression of the $600 million hydrogen plant.(Supplied: SA Government)

There is an agreement in place between the government and GFG to supply the company with hydrogen to use in a new electric arc furnace, which the firm says it wants to build.

In April 2023, GFG placed the order for the new piece of equipment from Italian firm Danieli, which would replace the existing coal fired furnace.

The new furnace is estimated to cost $485 million, a price tag GFG could lower through a $50 million contribution from the SA government and a further $63.2 million from the Commonwealth.

When the company announced the electric furnace deal last year, it said work was already advanced, with construction expected to be completed in 2025 to replace the existing blast furnace.

Fast forward to the present, and Mr Koutsantonis is heading to Italy next week to get a face-to-face update from Danieli as to where the project is at.

“I want to see how far advanced the engineering plans are for an electric arc furnace to be delivered in Whyalla as promised by Mr Sanjeev Gupta (GFG Alliance chairman),” he said.

“I want to be reassured that we are on track.”

Sanjeev Gupta
Sanjeev Gupta owns GFG Alliance, a collection of steel, aluminium and mining assets worldwide.(Supplied: GFG Alliance)

Mr Swiericzuk said the project was on the schedule the company had for it, as it looked to further lower emissions from the steelworks.

“The design and engineering on that facility is progressing with my own team and a small team of consultants are working their way through those studies,” he said.

The Whyalla woes are set against the continued back drop of questions over Mr Gutpa’s global operations.

The Serious Fraud Office in the UK launched an investigation into GFG’s financing arrangements with failed company Greensill Capital three years ago.

SA’s steel city has gone through cycles of booms and busts for decades, from the creation then departure of the shipbuilding industry, then the administration and sale of the steelworks through 2016 and 2017.

“The future of that community and that region is incredibly positive,” Mr Swiericzuk said.

“This is the great thing about Whyalla, they are a resilient people, and they are patient,” Mr Koutsantonis said.

“But even they can run out of patience.”

SOURCE: ABCNEWS

Leave a Reply

Your email address will not be published. Required fields are marked *