Whyalla Steelworks

Mr McBRIDE (MacKillop) (15:01): My question is to the Minister for Energy and Mining. Could the minister inform the house what the future of the Whyalla Steelworks looks like under this new ownership management structure? With your leave, sir, and that of the house, I will explain.

Leave granted.

Mr McBRIDE: With structural steel used in railways being a low-value product by value per tonne, will the government, BlueScope or KordaMentha consider a higher value steel product through the Whyalla Steelworks?

The Hon. A. KOUTSANTONIS (West Torrens—Minister for Infrastructure and Transport, Minister for Energy and Mining) (15:01): I hate to disagree with the member, but when the steelworks makes unfinished products—billet—it makes a loss. When it makes finished products like rail line and structural steel, they are high value and they do make money.

In fact, even with the way GFG operated, when they used their mill to the capacity to make structural steel and rolled rail line, it made money and it was profitable. But this is the picture that I want the member to understand—what Playford did and the genius of what Playford did. It was an integrated steelworks. As I said earlier, of $7.8 billion in iron ore exports since 2018, only a fraction of that is used as feedstock for the blast furnace. The majority of it is exported to international markets and makes a fortune for the owner. The whole idea of Playford's vision was that the mines subsidised the beneficiation.

What Mr Gupta was doing was what a lot of companies do and justify it in their own minds—but they didn't have an indenture the way GFG did—and that is they sold the iron ore to the steelworks at the same international parity prices they were selling it offshore. Then they were claiming from the previous government a royalty deduction, which we stopped in 2022.

If the steelworks manufactures rail line and structural steel, it will make money. The question is whether the market capture that Mr Gupta lost by trying to hot idle the blast furnace can be recaptured by the voluntary administrator? That is the key question. This is very important, because the Australian structural steel made out of Whyalla is of a high quality. It is well regarded. It is often used in public infrastructure because of its quality. Knowing that we have that sovereign capability, you can talk directly to the manufacturer here in this country. It has an excellent distribution arm. OneSteel Manufacturing is a company that has a good reputation despite GFG's best efforts.

So it is not right to say that finished product out of Whyalla is a low-value product. That is not true. What Mr Gupta was doing was manufacturing billet, despite us being in the Southern Hemisphere, and I understand selling it in an indice that it is based in the Northern Hemisphere to InfraBuild. The mines mine the iron ore, sell it to the steelworks at international parity prices. The steelworks makes unfinished billet, sells it at an indice at a loss to InfraBuild. InfraBuild buys it cheaply and then sells it at a profit—internal price transferring in his business.

The steelworks can make money and should make money because the mine is alongside it and the indenture that Tom Playford put in place in this parliament makes it so. You cannot have those mining licences without a steelworks. Anyone can make money out of those mines without a steelworks. It is easy. You get the contractor in, you've got the port, off you go. It is just digging dirt and putting it on a ship.

Making steel is hard. Rolling structural steel and rail line is hard and that is the expertise that we have in Whyalla and that is why we are fighting for it. If we lose it here, we will be subject to imports: imports from Thailand, imports from China, imports from Korea and imports from Japan. Imagine that: the largest exporter of iron ore and metallurgical coal not being able to make our own steel. It is not right to say in this parliament that our finished products are low value product. They are not; they are the best in the world.