Workers take pay cut as Whyalla steelworks shutdown enters eighth week due to blast furnace issues
Whyalla’s blast furnace has been offline since mid-March. (ABC News: Justin Hewitson)
Whyalla’s steelworks has been offline for more than 50 days amid major problems with its blast furnace, fuelling concerns among some of the city’s residents about the plant’s long-term viability.
The blast furnace cooled too much and molten metal hardened inside it following a planned two-day stoppage for routine maintenance in mid-March.
Since the breakdown, the painstaking, methodical process of reintroducing heat into the furnace has been “two steps forward, one step back”, according Whyalla Steelworks managing director Tony Swiericzuk.
“Each time we go and introduce another wind tuyere … is the technical term, it’s a hole, basically, that hot wind blows into the furnace through, you have to take the furnace offline for a short period of time to bring that wind tuyere back online, and by doing that you slightly chill the furnace again, so it’s that sort of one step back,” he said.
“And then when that extra wind tuyere comes on, it’s the extra two steps forward.”
The ABC understands the initial estimate was to have the furnace running by April 24.
But by the beginning of May, just six of 18 wind tuyeres had been brought back online, with at least 12 needed to pour quality steel.
There are about 1,100 employees at the steelworks, and they have accepted a temporary move to a roster of Monday to Friday, 9am to 5pm, rather than the 12-hour shifts across the normal 24-hour a day operation.
The change is a cut to wages of between 20 to 30 per cent.
“I’m feeling quite concerned for the young ones in Whyalla,” local resident Colleen Wilson said.
“All the hours have been cut down and they’ve got a lot of commitments so, it’s a bit worrying.
“I think they’re all on edge, that’s the feeling around town.”
Flow on impacts being felt
Several local contractors and labour hire firms have also been affected, with some contracts “adjusted” until the plant is back operating, according to Mr Swiericzuk.
“Where the contracts have required that to happen, they’ve been suspended, or services have just not been acquired,” he said.
Other businesses in Whyalla have also felt the impact, including Kate Dickeson, who runs a health food shop and cafe in the main street.
“We noticed business drop straight away,” Ms Dickeson said.
“I also have family members affected by it so, we knew what was coming.”
Former Whyalla mayor and MP Lyn Breuer said residents were concerned about the “very serious” situation.
“Many times in the past I’ve felt concerned, I’ve felt worried, I’ve felt a little bit of panic, in this instance I do feel quite sick about the whole thing because I’ve never known this to happen before with the blast furnace,” Ms Breuer said.
“So, I don’t feel good, but I still feel very hopeful, and I still feel that yes, we will survive.”
Business confident matter will be resolved
The Whyalla Steelworks is owned by Liberty Primary Steel, which is part of billionaire British businessman Sanjeev Gupta’s GFG Alliance.
GFG Alliance is confident the furnace will be fixed and estimate it will be back online by mid-to-late May.
Mr Gupta is attempting to position Whyalla at the forefront of Australia’s push to make green steel and wants to decarbonise his plant by 2030.
He has ordered a $500 million, 160 tonne electric arc furnace as part of his plans and would eventually be powered by green hydrogen – a process that should in theory reduce emissions to zero.
The federal government has committed $63 million to the project, and the state government has promised another $50 million, which SA Energy Minister Tom Koutsantonis said would be handed over once the furnace is operational.
The SA government also wants to sell GFG Alliance some of the hydrogen it plans to produce at the state-owned hydrogen power plant and electrolyser facility it plans to build near Whyalla by the end of 2026.
Gupta under pressure
Mr Gupta was seen as the saviour of the Whyalla steelworks when he bought the plant after it went into administration in 2017.
But he is under increasing pressure to repay debts related to his company’s European operations, with international media reporting that administrators had threatened to seize Mr Gupta’s assets.
A GFG Alliance spokesperson said the Liberty Steel Group had “signed a new framework agreement with its major Greensill creditors”.
The ABC has contacted the administrators for comment.
Mr Swiericzuk said he wanted to reassure the residents of Whyalla, “the future of that community and that region is incredibly positive”.
“We’re in a transformation period, as we’ve just talked about now, with the original blast furnace we’re now operating to the new electric arc furnace,” he said.
“We’re also on the transformation now to green steel.
“And we also have, and are working closely, with government on their hydrogen project in that region as well.”
Whyalla’s mayor Phill Stone said the company had no other option but to get the steelworks back operating again.
“We have got the optimism that they know how to do it, they’ve got the experts, it might be costing them an arm and a leg, but it has to be restarted,” Mr Stone said.
“As a sovereign nation, COVID showed us we need steel that is produced in Whyalla because the steel we produce – long products, construction steel – isn’t produced anywhere else in Australia.
“So, it’s vital to the nation … not just for Whyalla jobs, but the whole nation.”
Cherilee Bagshaw, who runs a nail salon in Whyalla, said there have been many promises made to the town, but now it was time to act.
“Whyalla’s been through so much and we always get promised all these things and we never really get to see anything progress,” Ms Bagshaw said.
“We’re always hoping that next person that comes along is actually going to do something great for Whyalla.”
“It’s a bit sad the way the company is going down there,” said Tony Strawbridge, who worked at the steelworks for 38 years.
“The town needs the place.”