Mining and Heavy Industries

Small win for struggling Arrium as OZ joins talks

Administrators for embattled South Australian steelmaker Arrium have scored a small victory, with the Federal Court granting an extension for the next creditors’ meeting to early 2017.

The extension, which postpones a meeting originally scheduled for May 13, is the result of an affidavit filed by Arrium administrators KordaMentha.

Arrium has an estimated 22,500 claimants making up its creditors.

KordaMentha applied for the extension based on a six-month estimate to restructure the company’s Whyalla steelworks, and the potential threat from US funds Morgan Stanley and GSO to cancel that process.

The extension came a day after South Australian treasurer Tom Koutsantonis announced a $10m fund to provide interest-free loans for Whyalla businesses experiencing cash-flow challenges as a result of Arrium entering administration.

Loans of up to $750,000 will be available to businesses, with applications considered on a case-by-case basis.

“During recent visits to Whyalla I saw first had the difficulties businesses in the region are facing,” Koutsantonis said on May 2.

“There is a severe cash flow issue for the Arrium supply chain which has rippled through Whyalla’s small business community.

“This loan system should inject a positive cash flow and ease the burden for those business doing it tough at the moment, and is designed to complement the administrator’s work.”

Koutsantonis visited Whyalla on May 3.

According to Fairfax, Koutsantonis referenced copper miner OZ Minerals, which it says is in talks with KordaMentha regarding the business.

Fairfax reports OZ is examining the idea of setting up its own processing plant at Whyalla, to process copper concentrate from its Carapateena copper project which is set to begin operations in northern South Australia in 2019.

The ABC also quoted Koutsantonis on the prospect of OZ joining the party.

“Discussions are in an advanced state between OZ Minerals and the administrator for a substantial investment here in Whyalla, which will create many jobs and also support the ongoing viability of the steelworks here in Whyalla,” the treasurer was quoted as saying on Tuesday.

ABC also quoted an OZ Minerals spokesperson, saying the company had investigated its site options for a concentrate plant in the region, with a final recommendation expected to go to the board soon.

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