Whyalla steelworks was ‘relying on luck for safety’ before administration

The Whyalla steelworks was losing $1.5 million per day before being forced into administration, burning through nearly $320 million in seven months, administrators KordaMentha revealed at a creditors meeting on Monday.

The administrators outlined total debts exceeding $1.34 billion, including $189 million in outstanding employee entitlements and $40.2 million owed to the South Australian government for unpaid water bills and mining royalties.

KordaMentha administrator Sebastian Hams described a facility in worse condition than during its previous administration under Arrium almost a decade ago, with critical maintenance neglected.

“There’s been minimal repairs and maintenance, and minimal CapEx has been performed over the last 18 months as a result of this cash shortage,” Hams told creditors.

Safety concerns emerged from the lack of investment, with even basic infrastructure like traffic lights at the entrance not functioning when administrators took over on February 19.

“We were starting to rely on luck for safety,” Hams said.

The steelworks was down to just three days’ worth of coking coal supplies when administrators stepped in, highlighting the precarious operational situation.

Former owner GFG Alliance, chaired by British billionaire Sanjeev Gupta, claimed in a statement that “prolonged blast furnace outages” and “heightened media speculation” had hampered its attempts to raise capital.

South Australian Premier Peter Malinauskas warned that finding a new long-term owner could take more than a year, emphasising the government didn’t want “a re-run of what we’ve seen in the past.”

Meanwhile, ASX-listed BlueScope Steel is set to be appointed as an expert adviser by the administrators to assess current operations with a focus on the blast furnace and steelmaking processes.

Picture: credit GFG Alliance