Whyalla Steelworks

Mr HUGHES (Giles) (15:36): I rise today to talk about the Whyalla blast furnace and the steelworks and the incredibly rough time that the Whyalla community has gone through over the last few months.

As people are aware, in mid-March the blast furnace went into a two-day shut. It went into that two-day shut colder than it should have been and, unfortunately, the furnace at this stage is not back up and running. Indeed, during that effort to get it back up and running, there was a hot metal breakout which damaged the external vessel of the blast furnace. The external vessel has now been fixed up and the efforts are back on getting the furnace back up and running, but it looks as though that will not happen until at least mid-June, but far more likely late June, and that is assuming everything goes to plan.

As a result of what has happened at the blast furnace, hundreds of workers have been taken off shifts. The usual pattern for a lot of workers, not all workers, is day shifts and night shifts, 12-hour shifts, so a lot of people have been put on day shifts of 7.6 hours a day, so that represents about a 30 per cent pay cut. There has been uncertainty amongst contractors, with some of those contractors and their employees not having work at the moment. Of course, there is a component of labour hire people as well and they have been affected with no work.

Assuming we get the blast furnace operating again, and I am very confident that will happen, the underlying issues at the steelworks have not gone away. It is an ageing plant where very little is done in the way of preventative maintenance. It is nearly all reactive maintenance, and for an ageing plant that is not a good position to be in. That is partly motivated by the fact that there is a desire, a wish, to transition to a new set of technologies. Direct reduction ironmaking and electric arc furnace are the two elements that have been given prominent publicity.

Without that transition, the steelworks is on borrowed time. What that then means for the Whyalla community, with the loss of the steelworks, would be devastating, and also what it means for the nation given it is the only integrated steelworks in the country that produces long products: structural steel and rail. It also produces a lot of intermediate steel product, most of which is exported to the Eastern States.

As I said, if the underlying issues at the steelworks are not addressed, we are on borrowed time. I have seen all of the promises. I have been there from the big reveal onwards, and I have formed my own views over a period of time. I have seen the promises in relation to a new mill, a mill that was going to double production. That has not happened. That has gone onto the backburner. It might have gone even further back than the backburner.

When the electric arc furnace was announced, I was told that it would be internally financed. Within a relatively short period of time, it was no longer going to be internally financed. It was initially going to be predominantly fed on scrap, which struck me as a little bit odd. Then it was not going to be predominantly fed on scrap and we needed a direct reduction iron unit as well. We are now in a position where, if you talk about the electric arc furnace, it is now subject to a bankable feasibility study. That bankable feasibility study will not conclude till the end of this year or early next year.

Then there is the whole issue about going out and raising the finance that is necessary to build the electric arc furnace. In fact, I think it would be more sensible to build a direct reduction iron plant first and then the electric arc furnace, or at least overlapping the two, because the blast furnace is not going to last forever and a day, and the DRI technology in a sense would be a replacement for that given it would use virgin ore from the Middleback Ranges.

So Whyalla is not out of the woods. Whyalla has a good way to go to get out of the woods, and a lot of things have to happen. There is going to be a role for government, but there is concern in my community about how things keep chopping and changing, about how things are said one day by the owner and then are changed the next day. It is deeply, deeply concerning.