Question Time

Whyalla Steelworks

The Hon. V.A. TARZIA (Hartley—Leader of the Opposition) (14:10): My question is to the Premier. Has the government provided any guarantee to fund the Whyalla Steelworks administration? With your leave, sir, and that of the house, I will explain.

Leave granted.

The Hon. V.A. TARZIA: By her affidavit dated 17 March 2025, Ms Lara Wiggins, Administrator of OneSteel Manufacturing Pty Ltd stated:

The administrators do not currently have sufficient funding to continue operations for 12 months.

The Hon. P.B. MALINAUSKAS (Croydon—Premier) (14:10): I thank the Leader of the Opposition for the question on what is an important subject and will be an important subject I suspect for some time to come. The short answer to the Leader of the Opposition's question is that yes, we have signed an agreement with the federal government around the funding of administration of OneSteel Manufacturing Pty Ltd. The funding agreement between the South Australian government and the commonwealth is that we are sharing on a fifty-fifty basis the funding of administration. The first tranche of funding through administration is just under $400 million and that is equally shared again between us and the federal government.

I can't speak for the commonwealth, clearly; but in respect of the South Australian government, we are committed to fully funding the administration with our federal partners for the period in which it takes to transfer the business from administration into the hands of a new owner. We take some comfort in the fact that there has been already a number of organisations, highly credible organisations, that have been in touch with the administrator regarding the potential sale but, of course, it is very early days. There will be a considerable piece of work that needs to be undertaken to separate tyre-kickers from those who are serious operators.

We have made it very clear to the administrator that it is the state government's, and, I think it is fair to say, the federal government's strong preference that we don't just get a new owner but we get the right new owner for the steelworks. It is very important for the whole economy around the Upper Spencer Gulf. The best thing we can do to ensure that occurs beyond funding the administration and ensuring it has got working capital to get it stabilised and ready for sale is to have a comprehensive package sitting there from government for the would-be new owner. To that end there is $1.9 billion available: $1.5 billion from the commonwealth, $400 million from the state.

We anticipate that the administration process will not be short. We know that the last time the organisation went into administration—and we hope this is the last; certainly we have a plan for that, but the last time it occurred it was 17 months. We don't think there is any reason to believe it won't be in that vicinity. We are at pains as a government to make clear that it is not going to be short, it is not going to be quick, it is going to take time. How long exactly is impossible to predict. That will ultimately be determined by the market but the amount of due diligence that needs to be undertaken before a new owner is going to buy it is going to be very substantial indeed, particularly given what we have learned since the business has gone into administration.

We suspected before we got access to the site that it had been run down and degraded. We suspected it had been under-invested in and we suspected it was unsafe in many instances. We had that intel, not just from the member for Giles who was talking to people on the ground there every single day, but I, the minister and others, in fact, senior members of the cabinet in a number of different portfolio areas had been on the ground talking to people who worked at the steelworks and they were telling us as much. So we are not surprised by what we have realised since then but it has become official that the business needs working capital, it needs to be invested in, it needs to have even the most basic of maintenance done to get it into a state where it is able to be sold.

That means a lot of cash is being worked through as a function of that. We knew, though, that the first part of the administration process would be the one that would utilise the most cash before we get into later in the process.

The good news is that much of the investment that is taking place isn't just about care and maintenance, it is actually about generating more revenue. Our initial stages of the MEP1 program, the magnetite expansion program, is a good example of that, and that is in train. We anticipate that it will not just stabilise the business but put it in a strong stead ready for sale.