The Whyalla steelworks in South Australia, once a key part of Australia’s steel industry, was losing $1.5 million per day before it was forced into administration by the South Australian government, according to administrators KordaMentha. The financial difficulties facing the steelworks were laid bare during a creditors’ meeting on March 3, 2025, where it was revealed that the steelworks had lost nearly $320 million in just seven months leading up to its administration.
The company’s debt obligations are staggering, totaling over $1.3 billion, including substantial amounts owed to employees, suppliers, and the South Australian government. With approximately $189 million in outstanding employee entitlements, $40.2 million in unpaid water bills and mining royalties, and $569 million owed to associated entities of OneSteel’s parent company, GFG Alliance, the steelworks’ financial situation is dire.
Financial Struggles and Losses
In the seven months preceding the administration, OneSteel, the former owner of the Whyalla steelworks, suffered a pre-tax loss of $319.1 million, operating at a loss margin of 26.7%. This translates to a daily loss of approximately $1.5 million. Administrators cited several factors contributing to the losses, including repeated blast furnace shutdowns, working capital constraints, and shipping restrictions.
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The steelworks had endured two blast furnace shutdowns in 2024, halting steel production for months and exacerbating the company’s financial woes. The South Australian government intervened in February, initiating the administration process to prevent further deterioration. As part of the administration, the government has provided an initial $100 million to help keep the operations running temporarily.
Safety and Maintenance Issues
Administrators also highlighted significant safety and maintenance issues at the steelworks. KordaMentha’s Sebastian Hams noted that the steelworks was running low on essential equipment and raw materials, including only 4,000 tonnes of coking coal left when the administrators took over—just enough to sustain operations for three more days. Furthermore, minimal capital expenditure had been made in the past 18 months due to financial constraints, which resulted in safety concerns, including malfunctioning traffic lights for vehicles entering the facility.
Despite these challenges, Hams emphasized that safety had remained a priority at the steelworks, but without continued investment, operating safely would become increasingly difficult.
GFG Alliance’s Response
GFG Alliance, which acquired the Whyalla steelworks in 2017, acknowledged the challenges faced by OneSteel and expressed regret over the South Australian government’s decision to put the company into administration. GFG’s statement, read out during the creditors’ meeting, cited the prolonged blast furnace outage in 2024 and the difficulties in securing capital due to negative media speculation. The company claimed it had reduced its losses by 30% by February 2025 and was aiming for a break-even point by mid-2025.
Despite these claims, GFG emphasized its commitment to cooperating with the administrators to find a sustainable long-term solution for the steelworks.
What’s Next for the Steelworks?
The South Australian government has made it clear that finding a new owner for the Whyalla steelworks will be a lengthy process, potentially taking over a year. Premier Peter Malinauskas stressed that the goal was not simply to sell the steelworks but to find an owner who is willing to invest significant capital to revive the facility and ensure its long-term viability.
GFG’s role in the steelworks’ future is uncertain, but early frontrunners for the ownership include BlueScope Steel, a major national flat steel manufacturer. BlueScope has already been appointed as an expert adviser by KordaMentha and will help assess the current operations of the steelworks, with a particular focus on the blast furnace and steelmaking processes.
Government Support and Future Investment
In an effort to support the steelworks’ future, the Australian state and federal governments have made $1.9 billion available to fund infrastructure upgrades and the development of green iron and green steel projects. These initiatives are part of a broader strategy to transform the steelworks into a more sustainable operation that can compete in the evolving global market.
Premier Malinauskas reiterated the state’s desire to see significant changes at the steelworks, including the introduction of electric arc furnaces and direct reduced ironmaking (DRI) technologies, which would modernize the plant and help it achieve a more sustainable future.
Despite the bleak financial situation, the hope remains that the right long-term investor will emerge to bring the steelworks back to life. However, this will be a complex and lengthy process, requiring careful planning and investment.
