Operator GFG Alliance revealed on Wednesday that it had suffered a setback in its bid to restart the Whyalla Steelworks’ blast furnace, which has not been operating since mid-March after going too cold during a two-day maintenance shutdown.

In trying to get the blast furnace back up to temperature over the weekend, there was an uncontrolled iron breakout which damaged the furnace’s external shell.

A GFG Alliance spokesperson said the damage was repairable but may delay when the furnace restarts.

“GFG Alliance is making steady progress on repairs to the Whyalla Steelworks blast furnace with 8 wind tuyeres now reinstated,” the spokesperson said. A wind tuyere is a nozzle which blasts air through the furnace to facilitate combustion.

“During the recovery work the furnace shell was damaged, this damage is repairable and that work is now underway.

“While GFG is working hard to bring the blast furnace back up to its usual operation as quickly as possible, this event may delay the anticipated restart date.”

Some workers at the steelworks have agreed to move from their 42-hours over seven days shift roster to 7.6 hours a day over five days to help GFG Alliance deal with the standstill.

Australian Manufacturing Workers Union Whyalla organiser Steven McMillan said the loss of weekend and night shifts amounted to a 30 per cent pay cut for some workers.

“There is an impact to a lot of people,” McMillan said.

“The union has been working with the state government and other NGOs within the town to put in services so people can go get financial advice free of charge.

“We’re working with the company and individuals who have extenuating caring responsibilities or the like.”

McMillan, who said his union represents more than 100 workers at the steelworks as well as other contractors working at the plant, said the overwhelming mood among workers was “frustration”.

“They fully understand that if you’re not making anything, the company can’t keep throwing money at them,” he said.

“The impact doesn’t just stop with the workers – it flows on to the community. So people are not spending money within the community. They’re doing what they can to pay the bills.

“The local shops and everything feels the impact. It’s not just the workers.”

Whyalla Mayor Phil Stone said around 50 per cent of the steelwork workforce has taken a 30 per cent pay cut.

He said the steelworks needs 12 out of 18 wind tuyeres operating to restart the furnace. It has so far reinstated eight.

“There is a degree of optimism throughout town, but also concern because we haven’t experienced this sort of issue in the past,” Stone said.

“Businesses like your lunch shops, your takeaways… the immediate consumable type businesses – a lot of those are suffering.

“We certainly have empathy for those that are suffering, because we know there are people that do go from basically pay to pay in their lifestyle.

“GFG are very aware of that as well and trying to do whatever they can to keep as many people as possible on the payroll.”

The Whyalla Steelworks. Photo: Thomas Kelsall/InDaily

Energy and Mining Minister Tom Koutsantonis said “hundreds if not up to a thousand workers will be on reduced shifts and not getting paid” due to the blast furnace setback.

He said the state government was taking international and interstate advice about the shutdown and the steelworks would be back up and running by June “if everything goes right from now”.

Asked if the state government would be doing anything to help the steelworks workforce between now and June, Koutsantonis said: “This is a private company. This company has received a lot of taxpayer support.”

“I would expect GFG to be doing everything they can to try and get this blast furnace back up and running again and get people back to work,” he told ABC Radio Adelaide.

“I’ve offered any assistance that they need if they need us to fly someone in, if they need capability or competency that they don’t have, we will get it for them.

“Whatever is required to get that blast furnace operating again, we will do.”

The federal government has granted GFG Alliance $63 million to help it acquire a $500 million electric arc furnace to decarbonise its operations.

A further $50 million has been on the table from the state government since 2017. The funds are expected to go towards purchasing the electric furnace from Italy.

Steel being produced at the Whyalla Steelworks in February 2024. Photo: Thomas Kelsall/InDaily

Koutsantonis said the steelworks are “central to our economic plan for the state” and he would be closely monitoring progress on the electric furnace.

He said realigning the existing furnace could cost up to $1 billion, compared to the $500 million cost of the new electric furnace.

“The steelworks is the last structural steel manufacturer in the country,” Koutsantonis said.

“If we lose Whyalla, Australia loses its capability to make rail lines, loses its capability to make structural steel – and that is unacceptable in a first world country.

“So the Commonwealth Government and the state government are committed to making sure this works but we also want to make sure that GFG are doing regular maintenance, GFG are reinvesting as they should.

“Because it’s no good coming to us for handouts if they’re not doing their bit as well.”

Whyalla has long faced uncertainty about the future of the steelworks, the town’s biggest employer.

The steelworks’ former owner, Arrium, was placed into voluntary administration in April 2016.

British billionaire Sanjeev Gupta’s GFG Alliance bought Arrium in September 2017, keeping the steelworks running in a deal worth a reported $700 million.

But the future of the steelworks was thrown into further doubt when Gupta’s main financier, Greensill Capital, went into administration in March 2021. GFG subsequently struck a debt restructuring plan for its Australian operations.

GFG Alliance is also facing a fraud, fraudulent trading and money laundering investigation from the UK’s Serious Fraud Office. GFG has previously said the investigation, which commenced in April 2022, does not relate to its Australian operations.