Government Announces $2.4 Billion Rescue Package for Whyalla Steelworks

The Whyalla Steelworks factory in South Australia, on Aug. 26, 2023. William West/AFP via Getty Images

Prime Minister Anthony Albanese and the South Australian (SA) government will attempt to rescue the beleaguered Whyalla Steelworks factory, which produces 75 percent of Australian structural steel.

This comes a day after SA Premier Peter Malinauskas took control of Whyalla Steelworks and placed it into administration, saying it was to deal with the company’s waning financial situation.

According to the federal government, the $2.4 billion (US$1.53 billion) rescue package includes immediate funding of $100 million to help Whyalla pay off creditors ($50 million), upgrade its infrastructure ($32.6 million), and improve employment outcomes for workers ($6 million).

Another $384 million will be spent to fund the Whyalla Steelworks’ operations during the administration process.

In addition, the federal and state governments are expected to invest $1.9 billion to upgrade existing infrastructures and build new ones to ensure the steel factory’s sustainable, long-term future once a new owner is found.

Of the above amount, $500 million will come from the federal government’s Green Iron Investment Fund, with ministers saying it will reinvent the plant into a “green iron manufacturing powerhouse.”

Meanwhile, the SA government’s contribution will come from funding previously earmarked for the Hydrogen Jobs Plan and $50 million from the Whyalla Steelworks Operational Efficiency Improvements Fund.

Before being placed into administration, Whyalla Steelworks was reported to owe tens of millions of dollars to creditors, in addition to unpaid wages for workers.

There were also concerns about the financial situation of GFG Alliance, OneSteel’s parent company, following the collapse of its key lender, Greensill Capital, in 2021.

Malinauskas said his government had to take action as GFG had failed to make good on its promises.

Whyalla Is Crucial to Australia’s National Interest: PM

In an interview with Nova Adelaide Radio, Albanese said Whyalla was critical to Australia’s national interest and the country’s sovereign steel.

“We can’t afford for it to be anything other than a success because we rely upon that steel for our railways, our bridges, our schools, our towers, our transmission infrastructure, [and] for our defence assets that are so important here in South Australia,” the prime minister said.

“So it’s absolutely critical as we go forward. And that’s why both of our governments are determined to protect the interests of Whyalla.”

Malinauskas said the rescue package was not a bail-out for GFG.

“I was never going to allow a taxpayer-funded bail-out of GFG,” he said.

“Now that the Steelworks is no longer under the control of GFG, the state government can partner with the federal government and make the long-term investments necessary to secure the future of Whyalla and Australian steelmaking.

“We are stepping up to provide immediate on-the-ground assistance for local workers and businesses.

Prime Minister Anthony Albanese (second right) and South Australian Premier Peter Malinauskas (second left) at the Whyalla steelworks in Whyalla, South Australia, on Feb. 19, 2025. AAP Image/Isabella Ward

It Was A Wrong Move: GFG’s Owner

Meanwhile, GFG’s owner, UK billionaire Sanjeev Gupta, said it was wrong for the SA government to force Whyalla into administration.

“This news will be disappointing to us all, not least to me personally, given the huge efforts we have all put in to save Whyalla in 2017 when it was losing $1 million a day, return operations in 2024 after a near-death experience, and promote Whyalla’s magnetite potential to a global audience,” he reportedly said in an internal company memo obtained by The Australian Financial Review.

The billionaire also noted that he was seeking legal advice on the issue.

GFG acquired Whyalla in 2017 for $700 million with an ambitious plan to transition the facility to a carbon-neutral one by 2030.

However, the steel factory’s performance has failed to meet expectations, as Gupta said he had lost over $1.3 billion on the plant.

Unions Support the Rescue Package

Meanwhile, several unions have announced their support for the $2.4 billion rescue package in a joint statement.

“This is a crucial investment in Australian industry, securing jobs now and for the future,” the statement read.

“AMWU [Australian Manufacturing Workers’ Union] members, along with the AWU [Australian Workers’ Union], ETU [Electrical Trades Union], and MUA [Maritime Union of Australia] welcome this support.

“Workers must not pay the price for corporate mismanagement.”