Another $100 million is needed to be added to the $50 million from the South Australia government to secure the troubled Arrium steelworks.
KordaMentha, the administrator of steelmaker and iron ore miner Arrium, says the state government’s $50 million contribution for the Whyalla works is a great response.
“This is the shot in the arm the community needs right now,” says Mark Mentha at KordaMentha.
“This will make Arrium a much more attractive and sustainable proposition for potential investors.
“It’s a great response to what has been an unbelievably strong display of unity by all stakeholders in the Arrium businesses that include government, business, local people, suppliers and employees.”
The state government has committed $50 million to support a new owner of the Whyalla steelworks. The funds will be placed in a facility that can only be accessed by a new owner if it is used to support the operations at Whyalla.
Mentha says he looks forward to working with South Australia to gain a further $100 million for future investment.
Premier Jay Weatherill has called for a bipartisan commitment from both major parties federally to contribute $100 million towards the funding facility.
“This would mean the total funding facility being offered to a new purchaser would be $150 million,” says Weatherill.
KordaMentha has been working for nine weeks on stabilising the Arrium businesses, maintaining normal operations and making significant cuts to costs.
The plan is to have Arrium on the market by the middle of July.
Arrium last month went into voluntary administration, a victim of falling iron ore prices and a steel glut caused by overproduction in China.
The iron ore miner and steel producer couldn’t get a deal with its lenders — the banks and note holders — to restructure debt of more than $2 billion.
Shutting Arrium could cost three quarters of a billion dollars and around 5000 jobs, according to analysis by the Australian Industrial Transformation Institute at Flinders University.