The South Australian Government will provide A$50m ($37m) funding to support the new owner of the troubled Whyalla steelworks, which has been put up for sale after Arrium entered into voluntary administration in April this year.
Arrium, the iron ore mining and steel manufacturing company entered administration following continuous weak commodity prices and the dumping of low-quality foreign steel in the Australian market.
The government proposes to place the funding in a facility that can only be accessed by the new owner if it is used to support Whyalla operations.
Australia Premier Jay Weatherill called for a bipartisan commitment from both major parties to contribute A$100m ($73m) towards the funding facility for Whyalla.
As a result, the new owner will receive total funding of A$150m ($110m) to support the long-term sustainability of steel-making at Arrium and help the company maintain its South Australian operations. The funding will be used for technological upgrades in the Whyalla operations.
Jay Weatherill said: "The Arrium operations at Whyalla are critical to both South Australia and the nation as a whole, it is essential that we retain our sovereign steel-making capability.
"I have written to the leaders of both major parties outlining our proposal to create a A$150m ($110m) funding facility to be accessed by a future purchaser of the Whyalla steelworks."
Treasurer Tom Koutsantonis said: "This funding facility proposal provides flexibility to potential future buyers while at the same time ensuring that the money stays in Whyalla to support the continued operation of the plant."
In order to support Arrium suppliers, the A$10m ($7.37m) Whyalla Small Business Loan Scheme was launched last month to offer interest-free loans of up to A$750,000 to South Australian businesses that supply Arrium.
Image: The Whyalla Steelworks circa 2009. Photo: courtesy of Joeltbooth.