0) Banks will have to write off big chunk of what is owed to them. They have already effectively become the owners of Arrium, (shareholders have lost all the value of their shares- sorry, you just need to accept that can happen in equities. The banks of course know very little about iron ore mining, steel making and marketing and will want out as quickly as possible, so. There are large cleanup costs if the site was to cease operation, as coke making in particular generates some hazardous byproducts, which will likely have entered the soil.
Because of present election mode and ultrasensitivity of Government which has dissipated its lead in the polls, the plants will continue to operate, and both Coalition and ALP will make promises to that effect till after the election. I dont know if Shorten is stupid enough to follow up on a promise to coinvest taxpayer funds in Whyalla, other than by implementing some sort of protectionist measures. The free traders in the Coalition will be sweating on this one. I saw Bill Shorten's Petrie forum performance last night and it would have appeared convincing to a gullible audience, I wish the Coalition had spokespersons of his calibre, who knew a bit more about how heavy industry works. Lot of farmers and lawyers and career pollies there, Bill Shorten can talk the industrial talk way better than any on the Governemtn benches that I know.
I saw Sen Kim Carr on APAC TV yesterday posturing to the Senate enquiry effectively looking for ways to use Standards Australia to act as some sort of standards enforcement agency with a view to making it more difficult to import steel. Standards Australia are not set up to be, they are really a publisher of standards and the authors are producers and customers of steel or whatever the standard pertains to. A credible independent analytical testing laboratory like AMDEL, ALS etc could make some money out of this in the short to medium term term. I don't know enough about steel to say for sure how imported steel might or might not meet Australian Standards. I have seen customers back in the early 80's suffer heavy losses from accepting forged or fraudulent test certificates on imported steel flanges, (they had to cut and remove every flange from a nearly completed LPG import and cryogenic storage faclility at Port Botany, NSW) but have not followed how that market has developed. I would say it is politically the safest route to stand behind the assumption that Australian made products will best meet AustralianStandards.
1) the Arrium assets will be effectively auctioned before the end of the calendar year hopefully.
AA The traditional Iron ore source near Iron Knob will be sold for very low price with the Steelworks to
either a buyer like BlueScope, a foreign steel maker like Tata, ThyssenKrupp. Bluescope has histroy of being in same group in BHP before the spinoffs, so there are some managers with historical ties in respective organizations. Bluescope is in good position politically to receive government support.
BB The newly developed Export Iron Ore mines will remain closed. The infrastructure should retain some value in a resurgent Iron Ore market at some future date and in a dry climate like SA should not deteriorate too quickly. Someone like Rio, BHP, FMG etc could pick them up for a few cents in the dollar, and sit on them.
CC The OneSteel Electric Arc furnace (steel recycling) at Laverton and associated wire and rod businesses will be sold separately, with little synergy with the Whyalla business.
DD The Grinding Media business should be saleable as a stand alone entity, and is probably the only thing that will generate any cash for banks.
EE. There is considerable value in the market mills in Newcastle etc Some of these could still operate with imported barstock if Whyalla closed as they provide a useful service to customers of finished products like reinforcing, wire, steel pickets etc Potential management buyouts as customer relations are key component of their value.
Steel is heavy per unit value so it is not easy to provide service to the local market through a market mill in an overseas location. Some erosion of margin and contraction may occur for customers who could be satisfied by a vendor with a market mill in another country,
Maybe yet more self storage and fitness centres will be opened, and on the next cycle some residential or office park developments.
I have been an equipment and engineering services provider to several OneSteel and Bluescope facilities over past 35 years and get no pleasure seeing the distress this causes workers and especially the many small contractors who are last in the queue for payments and hopefully those business owners and key staff (often the same person) will quickly move on from this, mostly without going under.
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