Steel industry reels amidst massive collapse

AUSTRALIA'S steel industry was reeling yesterday after the nation's only structural steelmaker, Arrium, went into voluntary administration.

The steel producer owes about $2.8 billion to the banks, $1 billion to suppliers and $500 million to employees.

Although administrators Grant Thornton said Arrium would continue to operate as usual, some 1000 Whyalla employees and 6000 other workers face an uncertain future.

Of those workers, 1000 are in Queensland, 3000 in New South Wales, 1000 Victoria and 500 in Western Australia, as well as overseas staff.

Federal Industry Minister Christopher Pyne urged the banks that were owed the biggest share of money to give the company a break, saying the surest way for the financiers to get their debts returned was to allow the company to trade its way out of it difficulties.

One of the administrators, Michael McCann, told the stock exchange in a statement that the business would keep trading on a "business-as-usual" footing while a "comprehensive and thorough review" was completed.

South Australian Treasurer Tom Koutsantonis said all employees and contractors, including mining industry companies, were being contacted about the situation.

He said "nothing was going to shut down", but also called for a national approach to the company's problems.

Mr Pyne, in turn, called on state governments to "take an interest" in the company's future and said the Federal Government had not offered Arrium any bailout funds because no request had been made.

He pointed to the Federal Government's decision to bring forward a South Australian railway contract for 72,000 tonnes of steel - an order the company was likely to win.

Labor's industry spokesman Kim Carr accused the Federal Government of failing to protect the steel industry's future.

A creditors meeting is expected to be held next week.

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