Why Albanese and Dutton are tripling down on a struggling steel mill

February 22, 2025 journo

One of the most important elements of the Albanese government’s $2.4 billion bailout for the Whyalla steel mill has so far been overlooked – four-fifths of the generous package won’t be committed until after the federal election, due by May.

The mill’s owner, GFG Alliance, was forced into administration in an extraordinary bipartisan move in the South Australian parliament last Wednesday, after the state lost its patience with the indebted business.

Prime Minister Anthony Albanese speaking to workers at the Whyalla steelworks in South Australia on Thursday.Credit: AAP

Owned by British billionaire Sanjeev Gupta, GFG Alliance has racked up tens of millions of dollars of debt with the state government and local businesses and the plant is in dire need of updates.

One day after the liquidators were called in, the state and federal governments revealed their multibillion-dollar rescue package for the beleaguered business.

With an election campaign just around the corner, Prime Minister Anthony Albanese was left with a difficult decision, to either find an urgent solution for Whyalla, or face potentially damaging questions over his commitment to local manufacturing throughout the campaign.

But the faltering mill is under administration for the second time in less than a decade, after previous owner Arrium was placed under administration in 2016, raising a serious question: are taxpayers throwing good money at a bad business?

It would’ve been trickier to sell to the electorate, but the government’s $2.4 billion rescue plan could have been used to put more than $1.8 million into the bank account of each of the steel mill’s 1100 workers, or $660,000 for each of the 3000 workers whose jobs depend on the plant, including local suppliers and services.

But Albanese will campaign, once again, on his vision of stimulating a “green manufacturing” future for the nation, in which Australia leads in the global switch from fossil fuel-based processes to clean industries.

During the past three years of government, Australia’s only electric car-charger manufacturer has collapsed, commercialisation of green hydrogen has not progressed and the Whyalla steelworks failed to deliver an electric furnace promised in 2023.

But the government is confident its funding can set up the Whyalla mill to produce green steel, using emissions-free hydrogen to replace coal in processing iron ore, and switching the coal used elsewhere in production with an electric arc furnace.

The support will start with $484 million in immediate funds to assist creditors, upgrade the plant and pay wages.

But the bulk of the big announcement, $1.9 billion for new infrastructure, will only be paid out if two big conditions are met.

First, a willing buyer capable of revitalising the mill must be found, and, second, that company must commit to turn the coal-fired mill into a low-emissions green steel enterprise.

That will be no small feat.

This nascent green steel technology is not in wide-scale production anywhere in the world.

The risk to Whyalla’s thousands of blue-collar jobs is also a challenge for Opposition Leader Peter Dutton.

He has rejected the economic viability of green hydrogen, indicated he won’t support the funding package if the government insists it is used for green steel.

However, he has committed to financially support the mill. That would mean tripling down on the twice-failed coal-fired plant to survive into the future.

It could take years to find a suitable buyer willing to turn the Whyalla mill green.

Conveniently, for the government and opposition, this question won’t be answered before the election.

The next federal election must be held within three months – May 17 at the latest – by which time the administrators might have just started to figure out what went wrong at Whyalla this time.

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