15 Buyers Circle Australia’s Whyalla Steelworks, Seemingly Assuring Its Future

A $2.4 billion (US$1.55 billion) federal and state government bailout and restructuring of the Whyalla Steelworks, announced in February, appears to have rescued the operation.

Administrators confirmed that a large group of potential investors was interested when the final expression of interest phase ended on Aug. 1.

More than 15 national and international parties have lodged proposals, including an international consortium led by BlueScope Steel, which has partnered with Japan’s Nippon Steel Corporation, India’s JSW Steel Limited, and South Korea’s POSCO.

South Australian Premier Peter Malinauskas said the strong interest was “good news for Whyalla, for our state, and for the thousands of people who rely upon the steelworks,” and a “positive sign for the future of the Whyalla Steelworks and for the future of sovereign steelmaking capability in Australia.”

Whyalla Steelworks, operated by OneSteel, is one of only two major steel manufacturing plants in Australia and is a critical link in the value chain of iron ore mining operations in South Australia.

When the government rescue package was announced, Prime Minister Anthony Albanese said in an interview that Australia “can’t afford for it to be anything other than a success because we rely upon that steel for our railways, our bridges, our schools, our towers, our transmission infrastructure, [and] for our defence assets.”

$1.3 Billion in Debt

In March, the government-appointed administrator KordaMentha, which had been examining OneSteel’s books, issued an affidavit (pdf) in which it said the plant was in “a state of disrepair.” It revealed OneSteel had been losing $1.5 million a day and owed around $1.3 billion to 648 unsecured and 68 secured creditors.

“Since taking control of OneSteel, we have identified that [it] has sustained a long period of underinvestment, inadequate or no maintenance, poor health and safety practices, has insufficient spare parts and inefficiencies operationally and financially,” the administrators said.

They also said that the influx of government funding, which Malinauskas and Albanese said would keep the plant operating for a year, was insufficient.

South Australia’s Minister for Energy and Mining, Tom Koutsantonis, said the strong field of credible bidders was “a clear vote of confidence in Whyalla, its workforce, and the future of Australian steelmaking.”

“We are determined to see Whyalla thrive—and that means finding the right owner with the vision and capacity to invest for the long term,” he said.

Sales advisor 333 Capital will now move to solicit indicative bids from shortlisted parties that have expressed interest. At this point in the process, with interest from multiple credible parties, the state government says there is no preferred bidder.