Potential Impact of the Closure of Arrium in South Australia

Abstract

Since early 2016 Arrium Ltd has been warning of the potential for closure of its Whyalla steelworks given the financial impact of debt funded expansion followed by a decline in iron and steel prices (and general commodity prices). The group disclosed a $60 million cash shortfall at the steelworks which has 1100 workers on staff and an estimated contractor workforce of around 450. Additionally as many as 1000 jobs in total of both staff and contract labour is exposed to any closure of its iron ore operation, which is also under threat due to heavy losses. The following is a preliminary analysis of the potential economic and employment impacts of closure of Arrium’s operations.