Unions predict Australia could be without domestic structural and rail steelmaking for up to five years, as about 500 employees are made redundant at the Whyalla Steelworks.
About 250 employees are expected to take voluntary packages, but there will be forced redundancies. About 100 contractors will also go, after attempts to repair the plant's 60-year-old blast furnace failed.
"Steel production is not possible without a blast furnace," Australian Workers Union branch organiser Shane Karger told 7.30.
"The earliest, realistically to make steel, I think we're closer to five years."
Seventy-five per cent of the nation's structural steel comes from the Whyalla plant, and has been used in construction of the Western Sydney Airport and Optus Stadium in Perth.
The steelworks is also the sole domestic manufacturer of rail steel. The plant will keep operating using stockpiled as well as locally and internationally sourced semi-finished steel product.
"The iron ore mines will obviously still operate and export any product that they produce but for this period of time, Australia is reliant on the rest of the world for its structural and rail steel," Mr Karger said.
Australian Industry Group CEO Innes Willox said it would become increasingly difficult to bring back structural and rail steelmaking capacity in Whyalla as time went on.
"The longer this goes, the more we will lose skill and capability … the more likely that we'll become more and more reliant on imported steel to fill the gap,"Mr Willox said.
"A clear, transparent path back to production is essential to give both the people of Whyalla, South Australia and industry more generally, confidence that there is a path forward. Right now, it's not so clear that there is one."
Broken furnace, holes in safety
The South Australian and federal governments have publicly pledged almost $2 billion to help a new owner invest in a less emissions intensive electric arc furnace.
Federal Industry Minister Tim Ayres didn't rule out putting more money on the table and told 7.30 his government was committed to the "fastest possible resumption" of steelmaking capacity.
"The commitment from the two governments here ... is to deliver a pit to port mining facility, iron and steel making and of course, finished steel products," Mr Ayres said.
"We're working closely with the final two bidders in the process to deliver the best outcome."
The shortlisted bidders are Indian industrial company Jindal and Australian business M Resources, while Australia's largest steelmaker Bluescope holds a right of last offer.
It had been hoped the coal-fired blast furnace would last a few more years, which would smooth the transition to that proposed electric arc furnace but Mr Karger believes cost cutting under previous owner Sanjeev Gupta's GFG Alliance shortened its life span.
"A decision was made … to throttle back the furnace," Mr Karger said.
"A typical blast furnace of that type likes to run at near capacity, keep the temperature up and the iron flowing.
"In my opinion, that was the beginning of the end of the furnace. It was just never the same after that."
A spokesman for GFG told 7.30 in a statement that Whyalla's problems did not begin with GFG and they have not ended since the company's removal.
"Despite significant losses, over six years GFG preserved jobs and Australia's sovereign steelmaking capability while battling an aging plant and grossly inadequate protection against unprecedented levels of steel dumping," it said.
"The blast furnace did not fail under GFG's watch … those now seeking to place all responsibility on GFG should also acknowledge Whyalla's long decline across successive owners, governments and policy regimes."
GFG Alliance has been struggling to stay afloat globally since the collapse of key financier Greensill Capital in 2021.
When the steelworks was placed into administration by the South Australian government in February last year, it was losing $1.5 million a day.
Administrators said they took control of a plant that had sustained a "long period of underinvestment, inadequate or no maintenance" and "poor health and safety practices".
The state and federal governments responded with $500 million in immediate and ongoing support.
Maintenance worker and AMWU delegate Trent Place told 7.30 that heat protective clothing worn by staff at the blast furnace at times had "massive holes all over them".
"People wearing safety glasses that they could barely see out of because they were so scratched … the reusing of gloves," Mr Place told 7.30.
"They were short supply because the company had burnt through so many suppliers because they weren't paying their bills."
Unravelling the GFG mess
Administrators KordaMentha plan to examine the "lawfulness" of transactions between Mr Gupta's portfolio of companies.
They claim Whyalla steel products were continually sold to another GFG company for less than what they cost to make and have told 7.30 the plant will be making the same volume of finished steel product as prior to the blast furnace shutdown.
Two other GFG businesses, the Tahmoor Coal mine in New South Wales and Liberty Bell Bay smelter in Tasmania, have also gone bust', leaving taxpayers to foot the bill for millions owed in redundancy and leave entitlements.
In 2021, the UK's Serious Fraud Office launched an investigation into suspected fraud, fraudulent trading and money laundering related to the financing and conduct of companies within GFG Alliance.
GFG has denied any wrongdoing amid the ongoing probe.
When queried by 7.30 what questions the federal government asked in the wake of that inquiry, Mr Ayres said leading up to Whyalla's 2025 administration this was a "private operator running a private company".
Australia's corporate regulator ASIC has confirmed it has several investigations underway into "related entities and individuals" within Mr Gupta's GFG conglomerate but has rejected criticism it acted too slowly on overdue financial reports.
Liberty Bell Bay failed to file statements on time for the years 2021 through to 2024.
The Tasmanian government said almost $200 million had been "ripped" from the smelter and loaned to other GFG companies.
"An investigation into GFG decisions, I think, is very important," Mr Karger told 7.30.
Wider community affected
Mr Place is hopeful he will get a new placement at the facility, while co-worker Brett Hockey has been re-deployed, though he acknowledges many colleagues may not be as lucky.
"If you … don't have a job anymore, the bills don't stop coming, the prices don't stop increasing," Mr Hockey said.
"It's gonna be really, really hard on a lot of families out there."
Mr Place is on the committee of the North Whyalla Football Club and expects to lose players and coaches.
"Senior wise, there's probably upwards of 20 seniors that could be affected, which is probably 30 to 40 per cent of the list," he said.
"I don't think it's fold stage, but … we're gonna have serious talks of merging."
Mr Place said one coach had already left to take up a job in Perth.
"So you sort of already lost good club people that are put a lot of effort and time in… so I'm pretty worried," he said.
Watch 7.30, Mondays to Thursdays 7:30pm on ABC iview and ABC TV
