South Australian Government Allocates $650 Million to Save Whyalla Steelworks

Whyalla steelworks owner, OneSteel Manufacturing, is in administration, but the government says its package is designed to support jobs and the local economy.

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

The South Australian government’s 2025/26 State Budget has allocated $650 million to support Whyalla steelworks, as part of a $2.4 billion package to keep the site operating.

This follows the collapse of its owner, OneSteel Manufacturing, into administration, and the failure of an earlier government-backed plan to save the site by using it to produce “green steel.”

“Steel-making has provided the spine to Australian industry for a century, and it’s here to stay,” Federal Minister for Industry and Science Ed Husic said.

“We want a strong future for Australian steel-making, [and] Whyalla will help deliver that.”

South Australian Treasurer Stephen Mullighan said the budget’s “three consecutive surpluses” have given the government “greater flexibility to respond swiftly to unexpected events, such as the Whyalla rescue and drought relief packages.”

The package includes an emergency response package for Whyalla worth approximately $99.2 million. That money will fund infrastructure upgrades—including $30 million over two years to upgrade the Whyalla airport to accommodate Qantas’ larger aircraft, creditor assistance payments, local business support grants, and a jobs and skills hub.

Of that, $7 million is allocated to support local small businesses, which can also apply for a share of the $50 million allocated to the creditor assistance scheme.

Another $7.6 million is to be spent on workforce support, including training and career transition, with an additional $2 million on community support, encompassing mental health and family support services.

It also funds steelworks operations during administration, for $192 million for approximately six months, ensuring that workers and contractors will continue to be paid.

The government expects a drawn-out sale process, and has set aside a further $384 million, on the basis that the federal government will continue to contribute half the total cost.

Additionally, approximately $395 million in state funding will be allocated over five years (to 2029/30) to partner with the federal government in supporting a new owner to modernise the facility.

Infrastructure Upgrades

The largest portion of the total support package—$1.9 billion—will be spent on infrastructure upgrades to ensure the steelworks has a sustainable long-term future.

It comes as the state’s net debt is expected to rise in the short term, primarily due to increased capital spending on housing and infrastructure.

Still, the government announced an $18 million operating surplus for the 2024/25 year, which it said enabled it to swiftly respond to help the steelworks.

South Australian Premier Peter Malinauskas said he was “never going to allow a taxpayer-funded bailout” of the facility’s previous owner, GFG.

“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 steel-making,” he said.

Part of the cost includes divesting hydrogen-enabled gas turbines ffrom the now-deferred Hydrogen Jobs Plan. That plan, intended to power the steelworks with “green hydrogen,” was planned to be completed this year and operational by 2026, but was abandoned last month due to delays.

Steel-making ‘Strategically Important’: Miners

The Association of Mining and Exploration Companies (AMEC) welcomed the new package, calling the steelworks a “strategically important industry for Australia that supports thousands of jobs both directly and indirectly.”

“This is welcome news for the people of Whyalla and the steelworks, which produces 75 percent of Australia’s structural steel for railways, bridges, schools, hospitals, high-rise towers, transmission infrastructure and defence assets,” said its Chief Executive, Warren Pearce.

“Certainty around the steelworks’ future [also] ensures supply chains, including port facilities in the Upper Spencer Gulf that are critical to unlocking a range of magnetite and other new mining projects in the region.”

The Commonwealth has earmarked up to $500 million from the Green Iron Investment Fund to support the longer-term transformation of the steelworks, and will provide additional financing to a future owner to upgrade the facility.