Whyalla Steelworks rail services suspended
Treasurer Stephen Mullighan says rail freight operator Aurizon’s decision to stop haulage services for the Whyalla Steelworks is “not a great indication” about the financial situation of plant operator GFG Alliance.
Australia’s largest rail freight operator Aurizon confirmed that it has “suspended some rail haulage services” for GFG Alliance – the operator of the Whyalla steelworks – amid “unresolved contractual issues”.
This is likely to impact GFG’s ability to move iron ore from the Middleback Ranges to the Whyalla steelworks and onto the port for export overseas, as Aurizon operates the freight line in the region.
An Aurizon spokesperson said the company was “in discussions with one of our customers regarding unresolved contractual issues”.
“We have endeavoured to find a suitable way forward; however, Aurizon has now suspended some rail haulage services to the customer until these issues are resolved,” they said.
“This will impact Aurizon’s operations and the work our employees do for the customer.
“We will continue to work through these potential impacts with our employees.”
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A GFG spokesperson said: “We continue to work constructively with our suppliers to manage through the current market downturn impacting the steel industry.”
Treasurer Stephen Mullighan told ABC Radio Adelaide today that he expected GFG owner and billionaire Sanjeev Gupta “to make good on his commitments, both to the government… but also to all of the suppliers, the workers and the creditors that haven’t been paid”.
He added that his latest advice was that payment is now being made to Aurizon and rail services are due to resume tomorrow.
“But it’s absolutely imperative that we see this steelworks operating properly and that creditors and everybody else is getting paid on time,” Mullighan said.
“It seems that they’ve had to stop providing those services in an effort to get GFG to pay that bill, which is obviously not a great situation for the steelworks to be in and not a great indication about how difficult a situation this had been when creditors aren’t getting paid what they’re due by the steelworks.
“The advice that’s come to government from GFG is that they have substantially improved in recent weeks how they’re going with paying their creditors, but the issue is of course not completely resolved because we want to make sure that not only all creditors are being paid, but we’ve got a blast furnace back up to full production.”
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A spokesman for Mining Minister Tom Koutsantonis told InDaily: “These are matters for GFG and the State Government continues to monitor and prepare for any contingencies and the long term future of one of the most important industries in Australia, steelmaking.”
The Whyalla Steelworks. Photo: Thomas Kelsall/InDaily
The suspension of services by Aurizon is the latest in a series of issues for the Whyalla steelworks operator, which is currently in the process of restarting its blast furnace which went offline in September – the second breakdown this year.
The state government also recently requested advice as part of “contingency” planning to be ready if the steelworks operator calls in administrators.
Energy and Mining Minister Tom Koutsantonis confirmed that the government was taking such advice, noting it was “what you would expect any good government to do to prepare for any contingency”.
It also follows reports that GFG Alliance owed tens of thousands of dollars to contractors. Further, the state government revealed in parliament in September that the company owed it unpaid royalties.
Nearly 100 staff have been laid off from the Whyalla steelworks in recent months, while up to 116 jobs at mining contractors connected to GFG Alliance were reportedly set to be cut.
The Whyalla Steelworks operations previously fell into administration in 2016 when its former owner, ASX-listed Arrium, collapsed. Arrium was sold to London-based GFG in 2017 in a deal heralded by former Premier Jay Weatherill as a “victory for South Australia”.
The Whyalla steelworks are a core component of the state government’s hydrogen plan, whereby it hopes to use hydrogen produced at to-be-built facilities for the creation of green steel at GFG’s factory. The installation of an electric-arc furnace is also planned to replace the ageing infrastructure at the Whyalla steelworks.
