State Budget Prioritises Steel Sector Stability
The South Australian Government has pledged $650 million in the 2025–26 State Budget to support Whyalla steelworks. The funding is part of a $2.4 billion package aimed at safeguarding local jobs and ensuring the long-term viability of the state’s steel industry.
OneSteel Manufacturing, the owner of Whyalla steelworks, went into administration in March due to operational issues. In response, the state committed significant funding to support the site during this transition phase.
The Whyalla Steelworks, South Australia
Breakdown of State Government Contribution
The $650 million state allocation will fund three key areas. It includes $192 million to stabilise the steelworks during the administration process. Another $395 million will help modernise the facility and ensure its long-term sustainability. The remaining $63 million is set aside for emergency response measures.
State’s Financial Position Enables Swift Action
The State Government’s decision to act swiftly is supported by its financial position. Treasurer Stephen Mullighan said, “Posting three consecutive surpluses gives the (State) Government greater flexibility to respond swiftly to unexpected events, such as the Whyalla rescue and drought relief packages.”
No Equity Stake for Government
Despite the investment, the government ruled out taking an equity stake in the facility. Mullighan stated, “That’s not what we’re planning for. We don’t want that to be the solution here.”
Industry Response: Support Welcomed, but Broader Action Needed
Industry leaders welcomed the announcement but called for wider support to drive long-term growth. Association of Mining and Exploration Companies (AMEC) CEO Warren Pearce endorsed the Whyalla package but urged action on exploration.
Calls for Critical Minerals Strategy and Exploration Funding
“While the $650 million package to save Whyalla steelworks is a step that helps to sure up key infrastructure and industrial capability in the region, industry is looking for support to discover and deliver new mines,” Pearce said.
Pearce called on the government to release South Australia’s long-awaited Critical Minerals Strategy and provide funding for its implementation. He also advocated for more resources for the Department for Energy and Mining to process tenements and co-fund drilling.
SACOME Warns of Challenges Ahead
The South Australian Chamber of Mines and Energy (SACOME) expressed similar concerns. SACOME CEO Rebecca Knol acknowledged the rescue package had stabilised operations but warned of challenges ahead.
“The 2025–26 State Budget highlights the significant ongoing expenditure resulting from the Whyalla steelworks being placed into administration,” Knol said.
“SACOME’s key takeaway from the 2025–26 State Budget is that no funding has been made available to progress strategic policy initiatives that the South Australian Chamber of Mines and Energy has identified as critical to growing the South Australian resources sector,” Knol added.
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Full $2.4 Billion Industry Support Package Details
The full $2.4 billion package includes joint funding from the state and federal governments. It is designed to provide immediate support, stabilise operations, and enable long-term upgrades
Immediate and Medium-Term Funding Breakdown
Of this, $99.2 million will go to on-the-ground support. A further $384 million will be spent to maintain operations for six months from February 19. Another $384 million has been set aside for 2025–26, subject to continued 50:50 federal co-funding.
Long-Term Co-Investment for Upgrades and Infrastructure
A long-term co-investment of $1.9 billion will support new ownership and facility upgrades. This investment will include infrastructure designed to secure the asset’s future.
“To support a new owner to invest in the necessary upgrades and new infrastructure which will be vital to ensuring the steelworks has a sustainable, long-term future,” the South Australian Government said.
Reprioritising Hydrogen Jobs Plan Funding
To prioritise the Whyalla initiative, the government will postpone its Hydrogen Jobs Plan. It will reallocate planned hydrogen facility funding to the steelworks rescue.
Steel Tariff Increase Unlikely to Affect Sale Process
The United States recently increased tariffs on steel and aluminium imports from 25 to 50 per cent. Treasurer Mullighan said this development is not expected to disrupt the Whyalla sale process.
“We still remain confident that we’re going to successfully transition this into the hands of a new buyer,” Mullighan said, according to the Australian Financial Review.
The Whyalla rescue package forms one of the largest state commitments to industry in recent years. While the funding provides short-term certainty, the broader resources sector continues to seek strategic investment and regulatory support.
