Steelworks forced into administration to 'save' future

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The Whyalla Steelworks has been put into administration following the South Australian government's swift passage of new laws, accompanied by a vow of "one of the most comprehensive industry support packages" the country has ever seen.

The move gives the government the power to take action on debts owed by GFG Alliance and secure the future of its operations in the state's mid-north.

Standing orders were put on hold in state parliament on Wednesday to allow the legislation to pass through both the lower and upper houses.

"GFG is no longer operating the steelworks and associated mines," Premier Peter Malinauskas said.

The company's been under a lot of heat from the government to pay up debts to the creditors of the Whyalla Steelworks and the state, which is owed "tens of millions of dollars", including $15 million to SA Water.

Mr Malinauskas, who's headed to Whyalla on Thursday with Prime Minister Anthony Albanese and Industry Minister Ed Husic, said he'd be announcing "one of the most comprehensive industry support packages that this country's ever seen".

The steelworks were entrusted to an administrator to sort out the operations and look into the possibility of selling the place, he said.

"It's completely unacceptable that a vital piece of the country's economic backbone is running in a state of such extreme disarray," he said.

Our focus is on backing the industry and its workers to ensure steel production in Australia remains secure, not a handout for GFG.

GFG is currently evaluating the impact of the announcement and is seeking professional advice on its next course of action.

"Our main priority is the wellbeing and safety of our staff," the company said in a statement on Wednesday.

The state has appointed KordaMentha as the administrator of OneSteel Manufacturing Pty Ltd, which is a part of the GFG corporate group.

KordaMentha will appoint an experienced special advisor to assist in the administration and is having discussions with parties, including steel manufacturer BlueScope.

The administrator is fully funded "and that means the bills get paid", said Mr Malinauskas.

The decision comes after a period of uncertainty at the steelworks and assurances from its chairman, UK billionaire Sanjeev Gupta.

Last Friday, Mr Gupta said a debt settlement agreement had been reached with creditors of global financier Greensill Capital, which had provided billions of dollars in credit to GFG before it went broke in 2021.

This week, he said the steelworks was raking in $13-$14 million a week and hoped to be back in the black by mid-year.

South Australia's Mining and Energy Minister, Tom Koutsantonis, said GFG's South Australian operations have generated iron ore sales worth $7.825 billion since 2017/18 and steel sales of $4.8 billion since 2019/20.

"In the same period, we've seen almost $800 million sent offshore ... this isn't a Whyalla issue - it's a GFG issue," he said.

The government's actions have been backed by the two major unions.

Australian Manufacturing Workers Union national secretary Steve Murphy said workers "had long lost confidence in Sanjeev Gupta and GFG to ensure the future of the Whyalla Steelworks, and the security of their jobs and their local communities".

The Australian Workers Union said a structured rescue plan was necessary, including strategic government assistance to facilitate new private investment.

The federal opposition said it backed the SA government's decision to put the steelworks into administration but asked for the total cost of the support package to be revealed.

Australia would become "greatly reliant" on Chinese steel imports if the steelworks were to cease operating, according to a report published by the McKell Institute's South Australian branch on Wednesday.

"That would leave us completely vulnerable to coercion from strategic rivals," Chief Executive Ed Cavanough said.