Whyalla blast furnace closure tests confidence in costly steelworks rescue

South Australia’s decision to permanently close Whyalla’s blast furnace will eliminate more than 600 jobs and leave the city waiting for a new steelmaking industry. The government says nearly $3 billion in public funds are supporting a long-term transition, but locals are questioning when the promised investment will produce results.

Whyalla’s 1960s-built blast furnace is to be permanently shut, ending the city’s primary steelmaking capability for the first time since steel production began there. The decision will cost more than 600 jobs and leave the regional South Australian community facing a period of uncertainty before a proposed next-generation steel industry can begin.

The closure has prompted questions about the public money committed to the steelworks. ABC News reports that nearly $3 billion has been pledged since February 2025, including $1.9 billion intended to support a new owner and co-invest in a greener future. That plan includes a new electric arc furnace, but steelmaking could remain several years away.

Local cafe worker June Worsnop questioned the spending, asking what the money put into the plant had achieved. The shutdown has not been unexpected for many residents, however, after the blast furnace’s coal-fired oven had been offline since April. Steelworker Steven Sharp said workers had repeatedly hoped the furnace would return, only to suffer further setbacks, and he is taking a redundancy.

The job losses will be supported by between $60 million and $80 million in redundancy payments, funded jointly by the South Australian and Commonwealth governments. A further $10.2 million will go towards counselling, retraining and re-accreditation, according to the source. Gym owner Justin Fennell said the effects would extend across the town, particularly for workers with young families and mortgages.

Energy and Mining Minister Tom Koutsantonis said the government had not spent $1 billion specifically on the blast furnace, but had spent that amount keeping 1,800 people employed while trying to recapitalise the steelworks. Premier Peter Malinauskas said the closure did not undermine the long-term plan, but said he would not feel confident until new capital and equipment were installed.

Jindal Steel and M Resources are bidding to become the new owner, while BlueScope Steel retains a right of last offer. The successful bidder is expected to be selected before the end of the year. The government says the closure was anticipated by both bidding companies, but if the planned transition falters, the debate over the money already committed is likely to intensify.