A three-month review of the Whyalla steelworks is underway to identify cost-savings and efficiency measures with British industrialist Sanjeev Gupta warning the operations remain “financially challenged”.
But Mr Gupta’s GFG Alliance group has also unveiled expanded development plans for Whyalla to become a world-leading, carbon-neutral steel producer.
“Since buying the business out of administration in 2017, we have made significant investments in the Whyalla operations, completed much-needed maintenance and introduced a comprehensive continuous improvement program thanks to the hard work of our employees,” Mr Gupta said in a statement on Wednesday.
“Despite the substantial improvements that have been achieved, the existing Whyalla facility, especially when faced with the additional impact from COVID-19, remains financially-challenged.”
Mr Gupta said he was committed to taking a personal role with the review team and said his group’s global experts had experience in returning similar assets to financial viability in difficult conditions.
“I am confident that with the cooperation of all our stakeholders, the existing Whyalla steel making operations will continue during the three-year transition period while the new plant is built,” he said.
There has been no indication of whether the sought after efficiency measures or cost-savings could include job cuts.
However, the longer-term plans for Whyalla now include a new iron facility to produce low-emission steel, called GREENSTEEL, using magnetite resources in SA and Australia’s domestic steel scrap.
An electric arc furnace will also be installed along with the previously announced construction of a new rolling mill to serve Australia’s rail, mining and infrastructure projects.
“This exciting plan will not only transform the Whyalla business into an internationally-competitive steel manufacturer, it will be our first primary steel plant to be transformed to GREENSTEEL, helping fulfil our ambition to become the world’s largest carbon-neutral steel producer by 2030,” Mr Gupta said.
“I believe in domestic manufacturing in Australia using its abundance of natural resources.
“South Australia, in particular, has one of the largest deposits of magnetite ore, and some of the best conditions for renewable energy, key ingredients needed for GREENSTEEL.”
Mr Gupta said the redevelopment of the Whyalla operations would double its production of value-added steel products allowing it to cater for infrastructure projects currently using imported materials.
Work on the rolling mill is slated to start later this year with the other developments to proceed in 2021.