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Monday, 7 November 2016
Page: 2991


Mr RAMSEY (GreyGovernment Whip) (19:24): I thank the Governor-General for his address setting out the plans this government has: stabilizing the budget, ensuring our nation is safe, growing our economy, developing new markets, embarking on the greatest ever investment in infrastructure and stimulating regional economies through our $200 million Regional Jobs and Investment Package, which I will speak about a little later in this speech. The Governor-General also outlined our intentions to support and promote agriculture, making a significant effort in the environment reducing CO2 emissions and real-time efforts in the natural environment, the National Innovation and Science Agenda, education, employment, health and a whole host of initiatives from aged care to the cashless welfare card, the same-sex marriage plebiscite and constitutional recognition of our Indigenous peoples. This government, the Turnbull-led coalition, has a very busy program and has been very busy since the election. While we have made considerable ground, I am really looking forward to the challenge of the next three years.

In my electorate of Grey I would like to express my satisfaction with the programs committed to through the election period. The funding to complete the Port Lincoln recreation centre upgrades; the Safer Communities programs in Wallaroo, Port Augusta, Minlaton and Port Lincoln; three mobile phone blackspot towers that we committed to make sure will happen at Bute/Tickera, Robertstown and Marree; and a commitment to fully fund a new headspace unit in Whyalla. However, the biggest and most important is our commitment to the upper Spencer Gulf generally with the announcement of a $20 million Regional Jobs and Investment Package for that area.

Australia is aware that steelmaking in Whyalla is facing an existential challenge. For those who are not familiar with the steel industry in Whyalla, it was originally developed on the back of Australia's first iron ore mine at nearby Iron Knob by BHP. In 1998 BHP spun off its steelmaking enterprises in Australia and the company Arrium was formed. One of its assets was the integrated iron and steel production platform in Whyalla.

Since that time, the fortunes of the integrated operation have waxed and waned, with the highlight being the investment in Project Magnet in the early 2000s, when a refurbished blast furnace was supplied with magnetite instead of hematite, thus freeing up the significant hematite supplies for direct export. The Whyalla port was redeveloped to facilitate barging of iron ore for loading onto Cape class vessels. This just preceded the peaking of the iron ore market and its subsequent retreat. To cut the story very short, in the last ten years the company increasingly focussed on mining and borrowed billions of dollars to expand capacity. These decisions coincided with long-term underinvestment in the steel plant, and when the price of iron ore crashed Arrium was left owing creditors more than $4bn in total. Arrium reported in early April that the company was going into receivership.

That news was certainly very challenging for the community. The steel works employ about 1,600 people directly, and the mining venture which supplies about two million tonnes a year for the blast furnace and eight million for direct export employs another 700. Given even a very modest multiplier effect, it is not difficult to extrapolate that well in excess of 50 per cent of the Whyalla workforce depends on the survival of the integrated operation. There is very little flexibility in the Whyalla economy. Essentially, it is a custom-designed city built to service one industry. If there is no iron or steel, there is very little reason for Whyalla. That, and the security imperative of Australia retaining an independent heavy structural steel capacity, is why I believe that we simply must find a way for this industry to survive and prosper, and it is why I have been very pleased with the federal government's input up to now in bringing this operation back to profitability, thus greatly enhancing its sale prospects.

Our work in tightening up the antidumping rules, making sure the commissioner is well resourced, advancing the Adelaide to Tarcoola line replacement, thus delivering an order of 80,000 tonnes of rail to the plant—this order, and a renewed commitment from the large Australian consumers has led to the recent announcement that the plant is to run an extra shift in the rolling mill with around 44 new jobs, and the blast furnace is operating at around 90 per cent capacity. Throughput is everything. The plant has high fixed costs and that means that maximum output significantly reduces the unit cost.

Further, the coalition government has delivered a $49.2 million low-interest loan for the purchase of a new beneficiation plant in the nearby mines, which will bring unmarketable ore stockpiles to be upgraded to export standard. It is estimated that this action alone will improve the bottom line in Whyalla by $50 million per annum.

Debate interrupted.