Arrium Management has Questions to Answer

Liberal Senator for South Australia Sean Edwards said management at Whyalla based steelmaker Arrium has questions to answer over the state of the ailing manufacturer.

Senator Edwards visited the Arrium Steelworks in Whyalla yesterday and he questioned management representatives during a Senate hearing in Canberra today.

“It appears to me that Arrium’s fundamental business of mining ore and making steel remains sound albeit under pricing pressure, however it is a company ultimately unable to manage its accrued debt.” Senator Edwards said.

“Added to this are difficult trading conditions, challenging commodity prices and the ongoing challenge for Australia to protect against steel dumped on the market with which Arrium has to compete.

“Market conditions are not fixed by government intervention but the government has introduced comprehensive anti-dumping measures to ensure a level playing field. Representatives of 63 steel industry businesses at the inquiry into steelmaking in Canberra today praised the recent changes in the anti-dumping regime by Minister Pyne.

“However managing Arrium’s debt position is the company’s key challenge. Against that measure I would suggest management hasn’t scored very well.

“For now, the ball is in the court of the twenty five different financiers of Arrium. While the board and management’s future may be uncertain, I am confident the banks will agree that the company’s fundamentals are strong and with the right arrangements in place, the core mining and steelmaking business is still an attractive business to be in for someone but without the accumulated debt that the board and management of Arrium have accumulated.

“Until then, the government is working with all parties to see that Arrium steelmaking remains right where it is and that the city of Whyalla and its people thrive,” Senator Edwards said.

In the interim the Coalition has reacted promptly by supporting Arrium in bringing forward a major upgrade to the east-west rail link between Adelaide and Tarcoola.

This will substantially boost demand for steel at Arrium’s Whyalla steelworks and deliver sales of around $80 million to the company.

The government has also announced a number of anti-dumping reforms, substantially boosting the Anti-Dumping Commission’s powers.