RUBY:

All good?

PAUL:

Yep.

RUBY:

Alright, let's jump in. So Paul, late last year you went to Whyalla in South Australia, a place that I believe once held great promise as the steel capital of Australia. Can you tell me a bit about the town, what it was like when you arrived?

PAUL:

Well, it's a trek to get there from Sydney, I can tell you. It's four hours north of Adelaide, about 400 k's, and it's a long, flat road.

RUBY:

Investigative journalist Paul Barry is probably most recognisable as the face and voice of ABC’s Media Watch. At least, that’s the reception he got in the Whyalla pubs.

PAUL:

It was extraordinary. I walk into this bar and they just go “oi, what are you doing here!”

RUBY:

He wasn’t just there to drink with the locals. When he visited in December last year, the steelworks was at a standstill. Contractors hadn’t been paid, and staff were facing mass layoffs. Paul was there to find out how things got so bad.

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PAUL:

What happens to the generations of steelworkers and their families who've worked in the business? And what about all the others who rely on the steelworks for the jobs? People are very worried and justifiably so.

RUBY:

From Schwartz Media, I’m Ruby Jones. This is 7am.

Today, investigative journalist Paul Barry, on the billionaire who brought Whyalla to the brink and how the town can be saved.

It’s Tuesday, January 28.

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RUBY:

So Paul, to start with, tell me a bit about Whyalla and why the steelworks there are so important?

PAUL:

So, it's a town that has 22,000 people. It was going to be much bigger. It's kind of like Canberra. It's sort of laid out very spaciously, big wide boulevards, trees down the middle sometimes, lots of brick built public buildings and a very, very friendly town. I just got a beautiful welcome when I went there. Whyalla was started back in the 1940s as a shipyard and then in the 60s as a steelworks by BHP.

Audio excerpt — Unknown:

“Industrial development in South Australia takes a big step forward with the opening of huge 40 million pound steelworks in Whyalla.”

PAUL:

It's the only steelworks in Australia that makes, the only primary steelworks, that makes what's called long steel and that is girders rails, the stuff that is used in the building industry. And if you didn't make it at Whyalla, you'd basically have to import it.

Audio excerpt — Unknown:

“From these automated smelters and rollers will come the vital steel to feed the hungry growth of Australia’s building, carmaking and engineering industries.”

PAUL:

Also, the steelworks is very important to the town. Although only about 1,100 people or 1,000 people now work there, there's something like 4,000 jobs in the town estimated to be dependent on it and that's not far off half the workforce in Whyalla. So if you got rid of the steelworks, if it went bust and wasn't rescued, Whyalla's future would be very much in doubt. I don't know what would happen to it.

Audio excerpt — Unknown:

“And now, the country’s most important new steel making plant.”

RUBY:

And so what did people who you spoke to in Whyalla say about their jobs to you? How fearful are they of the future of Whyalla?

PAUL:

They're incredibly fearful. Whyalla is old, it's like 60 years old at least. It's desperately in need of investment, desperately in need of maintenance. It went bust back in 2016 when Arrium owned it, and it was then rescued after a year in administration. And the guy who bought it, Sanjeev Gupta, was sort of seen as a saviour and it looked like all the problems were solved.

Audio excerpt — Sanjeev Gupta:

“Uncertainty in terms of the future of this plant is now over. We have a lot of work to do together and, you know, a great future ahead. But we need to work together and make changes because this is not currently a sustainable world class plant, it needs to become one.”

PAUL:

Sanjeev Gupta is a British-Indian businessman. He started off as a commodities trade and about ten years ago, he started out buying steelworks around the world. All these steelworks were losing money. They're all pretty desperate. They're all competing, or struggling to compete, against the Vietnamese and the Chinese and the Koreans who turned this stuff out in massive quantities much cheaper.

Audio excerpt — Sanjeev Gupta:

“We are not just another company looking to make a quick buck out of a distressed opportunity. It's first and foremost a family business. I regard this as part of my family.”

PAUL:

Essentially what this guy, Sanjeev Gupta, promised in Whyalla was it would all be modernised, it would be expanded, they would use renewable energy. It would make green steel, and there'll be a magnificent future.

Audio excerpt — Lyn Breuer:

“It's a wonderful feeling for our community. Everyone's feeling the same, from business workers, people that are retired. Everybody is feeling this feeling of relief. And the more that we're hearing about Mr. Gupta, hearing about Liberty, the better we're feeling.”

RUBY:

And so what has happened?

PAUL:

None of that stuff has happened. There hasn't been any investment. The coke ovens are packed up all together. The blast furnace has been out of action for half a year, it's now back in action again, marginally. But people are getting more and more worried that it's going to go bust quite soon. I talked to a creditor, a guy called Jim Watson, who runs an engineering consulting business. He relied almost entirely on Whyalla for his business, and he built it up to a stage where he had 17 people, he persuaded a lot of people to come up, professional people to come up from Adelaide with their families. Had a half a million contract coming into early 2024. All going fine and suddenly the work dries up. There is no work. He has to lay people off. They go back to Adelaide, he won't be able to get them back. He's now laid more people off. What happens to him if the steelworks goes down? It's not a good outlook.

RUBY:

And so as people who rely on the steelworks have been dealing with this, what has Sanjeev Gupta been doing?

PAUL:

In the middle of the crisis last year when all his creditors in Whyalla are, sort of, jumping up and down and not being paid, Gupta is in Sydney buying a $12.5 million apartment on the waterfront from broadcaster John Laws. He's, at the same time, just up the road from there, he's got a $34 million house that he's got plans to renovate at a cost of at least $10 Million. And so here's a guy who's bought up a whole bunch of ailing steelworks, promising in all of these places that he's going to transform them and in each of these places, the story is the same. Basically, the steelworks is now on the brink of bankruptcy. Some of them actually have gone bankrupt. He's being chased by people who are trying to wind up all these companies.

Audio excerpt — News reporter 1:

“Whyalla steelworks has been rocked by revelations owner Sanjeev Gupta’s overseas offices have been searched by serious fraud investigators.”

Audio excerpt — News reporter 2:

“Police wanting more information in their investigations after the serious fraud officers in the UK launched a probe into alleged money laundering within GFG alliance.”

Audio excerpt — News reporter 3:

“He reportedly owes almost a billion dollars to administrators of his collapsed financier.”

PAUL:

So it's an absolute hot mess and, as the crisis is hitting all these poor people who work at the plant or who are contractors to the plant or who have supplied stuff to the plant who aren't getting paid, he is out there spending like a drunken sailor.

So Whyalla is, in a way, one of the better ones. It's not quite so far down the tube as the ones in Europe are. But what's happened in Europe gives you a very strong clue of what's going to happen here which is that, promises aren't kept, he keeps on paying the workers for a bit and then eventually it all falls apart and it all goes bust.

RUBY:

After the break - how to bring Whyalla back from the brink.

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RUBY:

Paul, I suppose there’s a bigger question that goes beyond the failures of management and that is, whether or not it is actually possible to make the Whyalla steelworks viable. Will it ever produce steel the way it used to?

PAUL:

Absolutely. I mean, there is a question about, can Australia produce steel competitively? Koreans, the Chinese, the Vietnamese, they invest much more money, have invested much more money. They produce on a much larger scale. We probably can't compete with them. But do you let your steel works go bust and take a town down with it with 22,000 people? What do you do with them in terms of relocating them or putting them on the dole or finding jobs for them? So, it may be that you can't make steel as cheaply as some of these competitors but there's a cost in giving it up as well. And unless you can find other jobs to go into Whyalla, you're looking at a town that is doomed. So I think there are very strong arguments for trying to save the steelworks and it's not in terms of patching up an old one. It is in terms of building a new one that is powered by renewable energy.

RUBY:

And do you think that that is a viable option for Whyalla, green steel?

PAUL:

Look, I'm no expert, but the experts tell me that it is because that's the way the steel around the world is moving. All these steel companies are being forced basically to cut their emissions. And so you've got governments around the world which are stepping in Britain or in Europe to fund that transition to green steel.

They say Whyalla had a lot of natural advantages, it's got iron ore called magnetite, which is very, very high ferrous content in absolute abundance in the hills nearby. So that's a very important thing. Magnetite isn't a very common iron ore, and it's what you need if you're going to get rid of the old traditional coke blast furnaces, you need something with a high iron content. So that's one big plus. It's got a huge supply of iron ore. It's got a railway from where these iron ore mines might be. It's got a railway from the steelworks to customers. It's got a deep water port. It's got a massive amount of renewable energy because South Australia, the wind is blowing constantly and the sun shines all the time and it's also got a workforce, got a skilled workforce. So yes, I think it has a lot of stuff going for it.

But it does need commitment from the Government which would have to put in some money and it needs commitment from an international steel company which would need to go, yeah, we want to be there, we think it can be done. There is evidence that there are people out there who are prepared to do that. The South Australian Government called for expressions of interest in making green iron, which is kind of a previous step to green steel, and that 59 companies, I think it was, said yes, we're interested. And the South Australian Government is also building a green hydrogen plant which is going to happen whatever happens to Whyalla and that's supposedly going to be online in 2026. So there's a whole bunch of reasons why green steel could definitely work in Whyalla. Not worth giving up now.

RUBY:

Right but it sounds like for any of that to happen you would need not only government intervention, government funds, but you would need Gupta to go, so that another company could come in.

PAUL:

Yeah, damn right. There's no way, as they say, there's no way this is going to happen unless you get the keys to the place. You have to persuade him to step aside and that is unlikely to happen, judging by the way he's hung on to all these other businesses he has around the world. So it's not an easy job to get him out, that's for sure. But I think you do need to get him out because he ain't got the money to do it.

RUBY:

Obviously a federal election is on the cards in the next few months. How does that complicate the situation?

PAUL:

Well, I think it's very hard to see a Coalition government putting a lot of taxpayer money into green steel. I mean, it'd involved renewable energy and supporting industry, neither of which the Coalition is very keen on. And it's got a policy to rely on nuclear power in 2040. So the chances of Whyalla being rescued and modernised with the Coalition in the driving seat it seems to me are very slim. So, Labor has a problem, which is if this place is to be rescued and to be its future to be secured, Labor needs to act. That means that it's not just an interesting story that's going to bubble along for a bit. This is actually a bit of a crisis for Whyalla because there's only, what, 2 or 3 months until the next election. Unless something is done before then, it's really hard to see how the future can be secured.

RUBY:

Paul, thank you so much for your time.

PAUL:

It’s my pleasure.

RUBY:

You can read Paul Barry’s reporting from Whyalla at themonthly.com.au.

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RUBY:

Also in the news today...

The Trump administration has launched widespread immigration raids in Chicago. The arrests are part of a mass deportation plan targeting undocumented immigrants in the United States.

Last week President Trump signed a number of executive orders relating to immigration, including restricting legal pathways to come to the US and attempting to ban birthright citizenship. His administration has also given deportation powers to a broad range of law enforcement agencies.

And,

Australia’s foreign minister Penny Wong has urged unity across the political divide in a speech at Auschwitz, marking the 80th anniversary of the concentration camp’s liberation.

Senator Wong was joined in Poland by Attorney-General Mark Dreyfus and antisemitism envoy Jillian Segal, to commemorate International Holocaust Remembrance Day.

Last week, national cabinet met to discuss the rise in anti-semitic attacks in Australia, announcing they would start a register to track anti-semitic incidents. The Coalition has criticised the government’s approach as insufficient.

I’m Ruby Jones, this is 7am. See you tomorrow for an interview with former Australian of the year, Grace Tame.

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