1. A State of Disrepair: Whyalla Steelworks’ Troubling Condition
The Whyalla steelworks, a vital industrial facility for South Australia, is now facing critical issues related to its physical and operational conditions. According to a recent affidavit filed by KordaMentha, the administrator appointed to oversee the steelworks, the plant is in "a state of disrepair." The facility suffers from a long history of underinvestment, leading to insufficient maintenance and faulty machinery.
The affidavit outlined several safety concerns, including the lack of spare parts, poor health and safety practices, and instances where vital machinery has been inadequately maintained. One of the most alarming claims is that the steelworks might not be in compliance with occupational health and safety regulations, raising questions about the well-being of its workers.
2. Occupational Health and Safety Concerns
In addition to the structural issues at the Whyalla steelworks, the administrator raised serious concerns regarding the plant’s safety protocols. The lack of necessary maintenance has compounded these concerns, with administrators stating that "health and safety practices are poor" and the facility has had instances of "inadequate or no maintenance." These deficiencies pose direct risks to the workforce, which has been subjected to unsafe working conditions.
While the GFG Alliance, the steelworks' former owner, disputes these claims and asserts that over $2 billion was invested in upgrading the plant, the administrator's findings present a starkly different picture of the plant's ongoing challenges.
3. The Rising Cost of Repair and Maintenance
The discovery of further issues at the Whyalla steelworks has led to questions about the amount of money needed to restore the plant to a functional state. South Australian Energy and Mining Minister, Tom Koutsantonis, confirmed that the plant’s condition was worse than initially anticipated, requiring tens of millions of dollars in additional funds to address the deficiencies.
The South Australian and federal governments had already allocated a total of $2.4 billion to support the steelworks, with $384 million earmarked for its immediate needs. However, KordaMentha’s latest report indicates that the existing funding might not be sufficient to sustain operations for even a year. Consequently, the government will need to consider extending this financial support.
4. Financial Woes: Whyalla Steelworks Losing Money Daily
The financial situation of the Whyalla steelworks is equally dire. KordaMentha’s affidavit revealed that the steelworks was losing an astounding $1.5 million per day in the seven months leading up to January 31, 2025. Despite efforts to stem the losses, the company remains "loss-making," compounded by accounting practices that have worsened the cashflow situation.
One of the most troubling revelations is the claim that OneSteel (the previous owner) accepted prepayments for inventory that wasn’t delivered or even produced. The practice of selling steel to its sister company, InfraBuild, at below cost further exacerbated the financial troubles of the steelworks, adding to its already substantial debt load of $1.3 billion.
5. Mounting Debts and Employee Entitlements
In addition to the operational losses, the steelworks is facing a massive debt burden. OneSteel owes around $1.3 billion to 648 unsecured creditors and 68 secured creditors. Among these debts, approximately $189 million is due in unpaid employee entitlements, including annual leave, long service leave, and redundancy payments.
These outstanding employee entitlements highlight another layer of financial mismanagement, raising questions about the company's priorities and its ability to honor its obligations to workers.
6. Urgent Maintenance and the Shutdown of the Blast Furnace
In a bid to prevent further damage to the steelworks, urgent maintenance work was conducted, including the temporary shutdown of the plant’s blast furnace. This decision was made in March 2025 when it was discovered that the furnace’s roof and taphole required immediate repairs. The shutdown marked a significant disruption in operations, reflecting the dire state of the steelworks' infrastructure.
The decision to halt the furnace’s operations underscores the urgency with which the government and administrators are attempting to stabilize the facility while addressing the long-standing maintenance issues.
7. A Sale in the Future?
The future of the Whyalla steelworks is in question, with a potential sale on the horizon. According to KordaMentha, there are "upwards of 10" interested buyers for the plant, but any sale is not expected to happen before 2026. The lengthy timeline reflects the complexity of the situation, with KordaMentha needing time to stabilize the business, conduct feasibility studies, and ensure that the plant is in a suitable state for sale.
Premier Peter Malinauskas mentioned that the administration process could last up to 18 months, as the government works to ensure that the steelworks can survive long enough to find a new owner. The goal is to make the plant attractive to potential buyers, especially given the volatility of global steel markets.
8. Financial and Governance Challenges
One of the key obstacles in the restructuring process is the lack of transparency regarding the financial and operational history of the Whyalla steelworks under OneSteel’s ownership. KordaMentha has stated that GFG Alliance has been reluctant to provide complete access to OneSteel’s financial records, delaying investigations into the lead-up to the plant’s administration.
In the meantime, KordaMentha has been working to conduct feasibility studies and financial modeling to assess how much investment the steelworks requires to become commercially viable again. Despite the challenges, BlueScope Steel has emerged as a potential frontrunner to purchase the steelworks, signaling hope for a future resolution.
Key Takeaways:
• Poor Condition of Steelworks: Whyalla steelworks is in a severe state of disrepair, with critical issues in maintenance, safety, and machinery.
• Government Involvement: A combined $2.4 billion in state and federal government funds has been allocated to support the steelworks, including $384 million for immediate needs.
• Financial Losses: The steelworks was losing $1.5 million per day, with significant debt issues and financial mismanagement contributing to its struggles.
• Worker Safety Risks: The plant faces serious health and safety concerns, with inadequate maintenance posing risks to employees.
• Urgent Maintenance: The steelworks' blast furnace was temporarily shut down in March 2025 for essential repairs.
• Debt and Unpaid Entitlements: OneSteel owes $1.3 billion to creditors, including $189 million in unpaid employee entitlements.
• Sale and Stabilization: The steelworks is on track for a potential sale by 2026, with the government aiming to stabilize the plant before the sale process begins.
• BlueScope Steel as a Potential Buyer: BlueScope Steel has shown interest in acquiring the plant, with experts monitoring its operations.
• Financial Transparency Issues: GFG Alliance has been slow to provide full access to financial records, delaying investigations into the company's financial practices.
