The poor state of the Whyalla steelworks has raised questions about how much government money is needed to keep the ageing plant operating, which was built in the 1960s by BHP.
But the real issues is there’s $189 million in unpaid employee entitlements such as annual leave, long service leave, pay in lieu of notice and redundancies.
OneSteel also has about $1.3 billion in debts to 648 unsecured and 68 secured creditors.
The state and federal governments have already allocated $2.4 billion to support Whyalla including $384 million — potentially rising to $400 million — to keep the steelworks running during administration.
KordaMentha said this funding will not be enough to keep the steelworks operating for 12 months.
“Therefore, there will need to be an extension of the funding associated with the administration,” Premier Peter Malinauskas told parliament on Wednesday.
“[The] $400m figure was nominally allocated towards the first six months and then it will be extended from there.”
One must question the longevity of the steelworks.
The Whyalla steelworks was losing $1.5 million a day (before tax) in the seven months to January 31, 2025, and the business is “still currently loss making”, according to KordaMentha’s Monday affidavit.
Not only are the steelworks losing money, the steelworks’ cashflow is further compromised because OneSteel “appeared to accept ‘prepayment'” for inventory that it has “not yet delivered and is not yet in existence”.
KordaMentha also claims that OneSteel “continually sold product” to fellow GFG company InfraBuild “at less than the cost OneSteel incurred in producing that product”.
It was selling steel to its sister company on the cheap.
ASX-listed steel manufacturer BlueScope Steel is a potential buyer for the ageing plant
But a sale is not likely until at least 2026, with the Premier telling parliament on Wednesday that the administration could last as long as 18 months.