SA Premier Unveils $10.2m Support Package as Whyalla Blast Furnace Closes

South Australian Premier Peter Malinauskas has announced a $10.2 million transition package for Whyalla steelworks employees, hours after administrators confirmed the permanent closure of the site's blast furnace will cost about 500 jobs.

KordaMentha partner Sebastian Hams told workers and reporters in Whyalla on Monday that the closure decision came down to four factors: safety, the condition of the furnace's assets, the cost of continuing repairs, and the willingness of interested parties to keep trying.

"At the end of the day, the blast furnace made the decision itself," Hams said. "We've got to a point where it's simply unsustainable to continue the blast furnace recovery, and the failure of the blast furnace is inevitable."

The furnace has sat idle since April, and three employees were injured in July during attempts to restart it. It was commissioned in 1965 and last relined in 2005.

The closure will take the combined workforce across the steelworks, port and mine from about 1,700 to roughly 1,200. Hams said the business would keep running by importing steel bloom to feed the rolling mills, while the mine continues operating separately. Redeployment is the first option for affected staff, followed by voluntary redundancy, with forced redundancies described as unavoidable.

Malinauskas placed most of the blame for the furnace's condition on its previous owner, calling it "an old, clapped out blast furnace that has not been well cared for or looked after." He said the closure had come "a little bit sooner" than the government would have liked, but did not change its plans for the site's long-term future.

"Nothing that occurs today disrupts or undermines our ability to deliver the long-term vision of Whyalla, which is to have a new steelmaker with new equipment and new technology," Malinauskas said.

The $10.2 million support package will be split 50-50 between the state and federal governments, covering worker counselling, reskilling, reaccreditation of existing qualifications, and support for affected contractors. Malinauskas said the two governments would also jointly fund 50 per cent of redundancy entitlements for workers, on top of the conditions already secured through their enterprise agreement.

"Every worker that is made redundant through this process will receive their full entitlements, which to the great credit of the union movement are very generous," he said, naming the AWU, AMWU, CEPU and CFMEU as the unions involved in consultation.

On employment options, Malinauskas said BHP was looking to take on at least 100 workers, with Hallett and other mining operations in the Upper Spencer Gulf also recruiting. He said the government wanted to avoid losing skilled steelmaking workers from the region altogether, given they would be needed once a new owner recapitalises the plant.

The sale process is continuing alongside the downsizing. Two bidders, Jindal Steel and M Resources, remain in contention, with BlueScope Steel retaining right of last offer. Malinauskas said a decision on the steelworks' new operator would still be made before Christmas, and that he remains in regular contact with the Prime Minister on Whyalla's future, having met with him "as recently as a couple of weeks ago."

Malinauskas closed his remarks by thanking the workers who had kept the ageing furnace running as long as they did. "These are good people, good, salt-of-the-earth, hard-working people that really have achieved the impossible," he said.