Troubled steelmaker Arrium needs more than $100 million to upgrade facilities at the smelter in South Australia, according to administrator KordaMentha.
A funding proposition for the work, needed to make a sale more viable, has been put to the state and federal governments.
“I’m quietly confident that we will have a package from the federal government in the very near term,” Mark Mentha, a co-founder of KordaMentha, told the ABC.
“Attracting businesses with a package that is quantifiable and known rather than talked about, I think is absolutely critical to give confidence to the process and the fact that the administrators are governed by the corporations act, not the electoral act.”
The plan is to have Arrium on the market by the middle of July.
Arrium last month went into 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.
KordaMentha is looking at either a recapitalisation or sale of the Arrium group.
The latest financial statements and budgets are being prepared now to allow due diligence by interested parties.
Arrium, like many small iron ore producers, has seen its margins squeezed to nothing as the price of iron ore continues to fall on weakening demand for China where economic growth is slowing.
The assets up for sale include, the steelworks, port and mining operations, the grinding metal business Moly-Cop and OneSteel, a supplier of steel products in Australia.
Business Insider Emails & Alerts
Site highlights each day to your inbox.