Treasurer says it’s the Feds’ problem if Whyalla Steelworks sale falters
Tom Koutsantonis remains tight-lipped on whether more taxpayers’ funds are needed to keep the business afloat. Read the exclusive interview with InDaily.
South Australian Treasurer Tom Koutsantonis today ruled out having the state government buy Whyalla Steelworks if a sale – promised within 18 months of it being thrown into administration last year – fails to meet the deadline, saying it’s Canberra’s responsibility to ensure the sovereign capability is operational.
But he was tight-lipped on whether the state would throw extra funds to administrators KordaMentha if negotiations drag out. To date, about $2.6 billion in state and federal funds have been committed to the steelworks and to assist creditors and businesses in Whyalla to stay afloat.
In an exclusive interview with InDaily almost one year on from the state government on February 19, 2025, introducing new legislation to force the steelworks into administration, Koutsantonis comprehensively ruled out state government ownership of the asset. But he believed the sales process would stay on track.
“You can’t ask 1.6 million taxpayers to underwrite 30 million taxpayers – it’s not fair,” he said.
“This is about the nation’s economic sovereignty, it’s not about South Australia. The importance of Whyalla isn’t about Adelaide; it’s about Canberra.”
InDaily contacted the administrators for comment with no response.
Koutsantonis said an Australia that relies on imports for structural steel and rail line – produced currently at Whyalla – would be “dramatically exposed, not only economically but militarily”.
“I don’t think the Commonwealth Government could contemplate a world where Australia has no ability to manufacture rail lines or structural steel. It’s one of those sovereign capabilities that the country cannot do without,” he said.
“Whyalla is one of the most important cities in Australia. It’s not because of the local bakery and it’s not because of the iron ore mines. It’s because the ability of a country that’s a continent that neighbours no one to manufacture its own steel if it ever becomes isolated is just too important to even contemplate losing.”
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Administrators KordaMentha are currently running the steelworks and searching for a buyer to take over the asset after it was wrestled out of the hands of OneSteel, headed by steel mogul Sanjeev Gupta. The state government has continually said that a buyer would be found by August, 2026. A second meeting of OneSteel creditors is scheduled to happen by September 30 this year.
Koutsantonis said he was “very confident” a buyer will be found.
“The iron ore resources are world-class,” he said.
“If you want the iron ore resources, you need to run the steelworks. The iron ore resources are by far the most lucrative part of the business.”
He said the export of magnetite from the Middleback Ranges would underwrite the operations of the asset.
“Gupta generated nearly $12.5 billion worth of revenue our of Whyalla, most of it coming from the iron ore sales, and most of these profits were used to buy companies in Europe, rather than reinvest in the steelworks, which is how we got in this situation in the first place,” he said.
A consortium of companies led by Melbourne-based BlueScope is widely tipped as the frontrunner for buying the steelworks.
BlueScope – currently advising the administrators on facility operations – has right of first refusal for the Whyalla facility, meaning it can match any other bids that are put forward.
The company has been in the headlines during recent weeks, first fending off a takeover offer from a Kerry Stokes-controlled entity and on Monday, announcing big changes at the top. Tania Archibald was appointed managing director and CEO, replacing Mark Vassella, who has led the company for eight years.
The company heralded Archibald’s appointment as a “new era”, with one of her “immediate initiatives” to “simplify how we operate”.
When InDaily asked whether BlueScope was still bidding to buy the steelworks, a spokesperson said, “nothing has changed from our perspective with respect to Whyalla with Tania Archibald commencing in the CEO role”.
“We still have a keen interest in the Whyalla steelworks, along with our consortium partners Nippon (Japan), POSCO (Korea) and JSW (India),” he said.
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“The consortia have progressed to the next stage in the process, putting forward a non-binding indicative proposal. Obviously, it is still early days and any investment decision would need to meet the return of capital hurdles of the partners.”
The Treasurer hoped any buyer would have the “experience and financial credentials with a history we can examine”.
“What don’t we want? We don’t want any more white knights, no more billionaire heroes who turn up out of nowhere,” he said.
“People who’ve got a track record. We like, obviously, Australian investors. We like people from the subcontinent who’ve got long-term experience in steelmaking. We like people from Asia who’ve got long-term experience in steelmaking. People who’ve got track records that we can rely on.”
Asked whether the government should impose stricter guardrails around the operation of the steelworks to avoid another Gupta situation, the Treasurer said he was not concerned because the facility would move away from a blast furnace – a “difficult” process because it must operate constantly to be safe – to a direct iron reduction electric arc furnace. Gupta announced his own plans to install a $485 million electric arc furnace in 2023.
“A direct iron reduction electric arc furnace can be turned on and off to meet Australian demand and global demand for steel, so you don’t have to underwrite the losses” he said.
“What you will see is a much more sustainable plant at the end of this because the Commonwealth Government and us are putting such a major investment into moving away from blast furnace technology.”
Treasurer tight-lipped on future funding
To date, the state and federal governments have spent about $2.6 billion on various initiatives surrounding the administration of the steelworks, including supporting local creditors left in the lurch by Gupta and the day-to-day operations of the Whyalla facility.
This funding includes an extra $275 million to allow the continued operation of the steelworks as its administrator looks for a new owner. This money went to KordaMentha to maintain safe operations, pay wages and suppliers and undertake works to strengthen the steelworkers’ position during the sales process.
Koutsantonis today said the administration had been “funded through to a period of time” but refused to be drawn on a time period saying: “I don’t want to make that public just yet”.
“They have all the resources they need to continue operations through the sales process and we’ll make an update in the budget if we’re re-elected,” he said.
Asked if he would give administrators more funding if they asked for it, Koutsantonis said “I’ve got to be very careful here”.
“We’re in a sales process; there needs to be tension around that sales process,” he said.
“I don’t want it to be in administration a day longer than necessary, so I’m not going to be forecasting my views about a continued administration longer than necessary to the administrators or anyone else.”
Shadow Treasurer Ben Hood called for a clear timeline to be made public, sayingthere was “little understanding of a clear timeline, especially with the fact that it is costing millions of taxpayer dollars a month”.
“In every instance of expending taxpayer money, taxpayers should rightly expect clear lines of communication and transparency on the process,” Hood said.
“’Trust us, it’ll be fine’ doesn’t cut it when you are talking about the type of money that has been expended.
“Given the Stokes’ attempts at the takeover of BlueScope and the alliance with Nippon Steel, there are still questions that remain unanswered.”
