The Whyalla Steelworks in northern South Australia is at a pivotal crossroads that may determine the region’s economic future and broader Australian industry. Facing operational and financial struggles, the South Australian government has intervened decisively, placing the Steelworks into administration in February 2025 to prevent further deterioration caused by neglect under previous management. The state has committed a significant rescue package of $2.4 billion, with $1.9 billion aimed at revitalizing the Steelworks, which is essential for achieving Australia’s green steel objectives.
This marks the second time in less than ten years that the Whyalla Steelworks has entered administration, highlighting persistent challenges linked to outdated and high-emission manufacturing processes. Current discussions suggest that some parties, particularly BlueScope Steel—the nation’s sole other steel manufacturer—are exploring the possibility of transitioning the facility to a fossil gas-based operation. BlueScope has sought substantial financial support to facilitate this shift, raising concerns about the long-term implications of sustaining such a pathway.
A new report from Climate Energy Finance raises alarms regarding this approach, arguing that relying on fossil gas will not only hinder efforts to decarbonize but is also economically impractical. South Australia’s natural gas prices are among the highest in the world and could greatly impact the competitiveness of the region’s steel industry. The report posits that the cost of subsidizing a gas-led transition could reach up to $2 billion over a decade, primarily benefiting companies like Santos, which has historically avoided corporate tax on extensive revenues.
Moreover, investing in gas infrastructure may lock the region into high-emission practices for decades, conflicting with national climate commitments. The transition to green iron production, fueled by renewable energy and green hydrogen, represents a more viable and sustainable future for the Steelworks. The report advocates for using public investment to stimulate renewable energy development, positioning Whyalla as a leader in the green steel market.
Harnessing South Australia’s abundant magnetite iron ore reserves and renewable energy resources, the government is encouraged to explore innovative funding strategies such as public-private partnerships and market-themed initiatives. These efforts could transition Whyalla into a green iron exporter, creating substantial economic benefits and aligning with global decarbonization trends.
The potential growth spurred by this transformation could lead to new jobs in renewable energy, advanced manufacturing, and professional services, ensuring a resilient future for Whyalla that meets both local and global demands. The commitment of the South Australian and Federal Governments to this vision will be crucial in turning the tides for the region’s industrial landscape.