The ‘hope and wait’ strategy for Whyalla isn’t working
The State and Federal Governments need to act to make Australia make again, writes former Senator Rex Patrick.
It’s been a week since Premier Malinauskas conceded he has grave concerns for the future of the Whyalla steelworks.
In that week there was a lot of talk on radio and television, newspaper headlines and a visit to Whyalla by the Premier.
But what’s happened in this past week does not bode well for the City of Whyalla or the state.
GFG is in deep trouble. That’s been obvious to everyone for many months. Sanjeev Gupta can’t pay his bills; not to his suppliers or to the South Australian government.
He’s embroiled in international financial difficulties and legal proceedings across the globe. He’s struggling to get a USD$150M loan just to get him through his most pressing problems; and he’s got a snowball’s chance in hell of raising the money that’s needed to upgrade the Whyalla steelworks into a 21st-century industrial facility.
The blast furnace at Whyalla is 60 years old.
If the status quo is maintained then next year the blast furnace will 61 years old, and the year after that it will be 62 years old.
If Gupta stays in charge and continues to fail to secure the long-promised investment that’s needed, the steelworks will be heading towards the scrap heap. That’s the ugly truth.
Back in October, Senator Jacqui Lambie and I called on the State Government to use GFG’s unpaid mining royalties as the lever to put GFG into administration and open the way for the Federal Government to take ownership of the steelworks, or enter into an equity partnership with a steel manufacturer, and make the needed investment to transform the plant into a modern facility.
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There’s money there. The Albanese Government is gifting $5 billion to the United States to invest in American shipyards and a similar amount of money is going to the United Kingdom for their shipyards.
As the Federal election closes in, Prime Minister Albanese has been splashing billions about the country – everywhere except in Whyalla.
Malinauskas travelled to Whyalla this week. He took a number of Cabinet members with him: Deputy Premier Susan Close, Treasurer Stephen Mullighan and Mining Minister Tom Koutsantonis. But he basically did nothing.
Malinauskas did confirm he’s been speaking with the Prime Minister, but the PM has been absolutely silent on Whyalla, despite a week of Federal Parliament sitting and the issue of steel production being in the headlines thanks to Donald Trump.
Malinauskas has also declared nationalisation of the steelworks is not an option. It’s apparently not on the table at all.
There’s been much tub-thumping directed at Gupta, but it’s clear that Malinauskas doesn’t have the PM’s support to do anything bold.
Gupta won’t have failed to notice that this week.
He put out a statement saying: “We are vigorously finalising new financing. Although this process has taken a bit longer than anticipated, I remain confident of its delivery.”
Whether his confidence is justified remains to be seen, but he can be confident Premier Malinauskas isn’t going to force his hand.
Gupta knows that the South Australian Government can do little without the wholehearted backing of the Federal Government, and that just isn’t happening.
The PM has quietly put national interest aside.
He’s too busy looking after Federal Labor’s interest in getting back into the Parliament, and South Australia only has two tight Federal seats: Boothby and Sturt, which are both 400km from Whyalla. The seat of Grey is not on the PM’s political radar.
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Peter Dutton hasn’t been helping either.
Whyalla isn’t part of his political strategy so he’s not had a word to say about the steelworks. Politics is about pressure, and the Liberals have brought as much pressure to bear as a flat tyre.
And so, we are left with a “hope and wait” strategy from the State Government. And that’s just weak.
Where is Whyalla heading?
Malinauskas has been talking up the magnetite reserves in the Middleback Ranges. But it’s clear the idea of using that resource and abundant renewable energy to carry through a green steel export revolution has faded into the distance.
Of course that was the dream long spruiked by Gupta and GFG but never carried through. The Premier picked that up as his own vision, but there’s no prospect of GFG delivering now.
Most likely Malinauskas is now thinking about just exporting the magnetite through Whyalla to other countries where steel is made. That’s where his bankrupt policy stance and the timidity of the Prime Minister are heading.
It’s hardly visionary. There’s little future for Whyalla in that.
And it’s an all too familiar story.
A big part of Australia’s chronic economic weakness rests with political leaders happy to accept colonial status in which we just shovel out rocks for other more advanced economies to transform and value-add.
The State and Federal Governments need to act to make Australia make again. Value add is where the high-tech jobs are and where the profits are. What Australia needs to resist in our current role as the world’s quarry. We can and must do better.
A country with vast mineral resources that can’t manage to make its own steel is hard to take seriously. The Whyalla steelworks is of vital national importance and governments should be bold in taking action to safeguard and rebuild that asset: nationalisation if that’s what it takes.
Whyalla and our national interest can’t be left hostage to Sanjeev Gupta’s increasingly precarious financial high-wire act.
If the situation continues to drift, Whyalla will be left to wither in the desert.
Rex Patrick is a former SA senator and the Jacqui Lambie Network Senate Candidate for SA in the next federal election. He is a Whyalla boy.
