The downfall of Arrium – and the “economic tsunami” associated with it – could easily hit the Illawarra, one of the region’s steel industry campaigners has warned.
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Just months after Illawarra workers sacrificed pay, conditions and about 500 jobs to keep BlueScope’s Port Kembla steelworks open, the dire situation facing the Australian steel industry has hit home in South Australia.
Arrium – a steel and mining group that operates 94 individual operating entities under its banner, including the Whyalla steelworks – was placed into voluntary administration on Thursday morning.
South Coast Labour Council secretary Arthur Rorris said the decision had sent “shockwaves throughout the Australian steel industry and across regional Australia”.
“What we are seeing in Whyalla today [Thursday] could very easily be Wollongong,” Mr Rorris told the Mercury.
“The economic tsunami that the people of Whyalla are facing today [Thursday] is a picture of a disaster that could hit the Illawarra if the federal government does not act, and act now – their time is up.”
In a short statement to the Australian Securities Exchange, Arrium said discussions with its bankers and noteholders “have now ceased”.
“After considering the available alternatives, in the current circumstances it has become clear to the board of Arrium that it has, unfortunately, been left with no option other than to place the relevant companies into voluntary administration in order to protect the interests of stakeholders,” the company said.
Mr Rorris said Illawarra steel campaigners stood in solidarity with the people of Whyalla, its steelworkers and their families who “through no fault of their own have been put in this tragic position”.
“Have a look at Whyalla and think about how Wollongong would fare if this catastrophe hit our region,” he said, citing the actions already taken by Illawarra steelworkers.
“If people are wondering why the workers have made those sacrifices they need to look at Whyalla,” he said.
“That is why the workers of the Illawarra took the decision that they did, but we were fortunate enough that BlueScope’s debt levels were nowhere near where Arrium’s are.
“However, if the federal government does not act now, our luck will run out.”
The financial collapse of Arrium is a “massive national problem” and requires a national solution, according to South Australian Treasurer Tom Koutsantonis who has pledged a capital injection into the Whyalla steelworks to make it more efficient so that it can continue operating under any prospective new owners.
It comes as federal Industry Minister Christopher Pyne reinforced that a national approach was needed and that the governments of NSW, Victoria, Queensland and Western Australia would need to be part of a fix-it strategy, with 3,000 Arrium workers in NSW and 1,000 each in Victoria and Queensland.
Mr Pyne said Prime Minister Malcolm Turnbull was “hands on” in the crisis but the federal government hadn’t been approached by the administrators of the company for a direct bail-out.
"The use of taxpayers fund in a bail-out is a very blunt instrument," Mr Pyne told reporters in Sydney.
He said the biggest problem with Arrium had been the decisions of previous management and the board to buy assets at the top of the cycle, which had left the company with debts of $2.8 billion. A worldwide glut of steel from China had hurt steel prices and this was an issue for all steel-making countries.
Mr Pyne said the federal government would take into account the strategic benefits of Australia's steel-making capacity as rescue plans were formulated, and urged the banks to keep the company trading because it was the best way for them to get their money back.
"We do have to consider the strategic benefit of the industry," Mr Pyne said, as he also pointed to Port Kembla's BlueScope Steel operations being profitable under management which hadn't let debt levels balloon.
In an earlier statement, Mr Pyne said the federal government was “disappointed” at Arrium being placed into voluntary administration and remained “hopeful that a positive outcome can be achieved”.
Mr Pyne also outlined measures already taken to support the Australian steel industry.
“Despite this work by both the state and federal government it is clear that the issues being experienced at Arrium are not able to be addressed with further regulatory interventions by government,” Mr Pyne said in the statement.
That comment didn’t sit well with Mr Rorris, who accused the government of “covering their butts” and providing excuses rather than taking action.
““We don’t need an obituary from Pyne, we demand that the government acts,” he said.
“We don’t need their sympathy, we want their action. The government has totally lost the plot if they think we are going to sit down and cop their excuses for sitting on the sideline.
“We want them on the pitch, we want them playing; they still don’t get it.”
- with smh.com.au
