OUT OF THE ABYSS THE UPPER SPENCER GULF
The bad run has ended for the cities of the Upper Spencer Gulf, who can finally catch their collective breath as new regional investments signal hope.
TWELVE months ago the Upper Spencer Gulf cities of Whyalla, Port Augusta, and Port Pirie in South Australia were existing in a state of uncertainty.
In Whyalla, the sale of Arrium’s assets remained up in the air; dire times for a community which had been impacted by almost 1000 job losses leading up to Arrium entering administration.
If Arrium failed to secure a new buyer, many believed Whyalla and – to a lesser extent – the State of South Australia would fall into economic and social crisis.
“We had never been in a situation where [the Whyalla steelworks] went into administration and owed $4 billion,” City of Whyalla mayor Lyn Breuer said.
“That was such a gut cruncher for the community because while we had issues before when the shipyard closed back in 1970s, this was the really big one. I could not see us being able to get out this of easily.
“Community morale went right down, community confidence and spending went right down; people were very nervous.”
Sentiment was similar in Port Augusta, which was struggling to fill the economic void left by the closures of Alinta Energy’s Leigh creek coal mine and coal-fired power station, while things were better in Port Pirie with Nyrstar’s 127-year-old smelter at the tail end of a massive $600 million redevelopment.
Flash forward to the second half of 2017 and things were beginning to look up for the Upper Spencer Gulf, with a run of good news renewing confidence in the region.
A huge turning point was the July sale of Arrium to GFG Alliance, led by Gupta Family Group executive chairman Sanjeev Gupta, which ended 15 months of uncertainty for the people of Whyalla and supply chain businesses in the area.
“I don’t think we could have asked for a better result,” Ms Breuer said.
“Certainly the State Government has been very important to Whyalla over the last 18 months, and very important to the sale process of Arrium [through its $50 million contribution to support the new owner].
“I feel very confident about GFG Alliance and their role in all of this, very confident about his [Sanjeev Gupta’s] attitude, not to just the plant itself but to steel making and our community.
“He’s prepared to get involved in our community, to put money into our community, as well as the rebirth of the steel plant.”
On 28 September, Nyrstar announced that hot commissioning of the Port Pirie redevelopment had commenced, which was followed by the first feed of the TSL furnace in October.
The region also had a number of high profile mining developments underway.
The massive $4.5 billion Central Eyre Iron Project received State Government approval in May and, if developed, will employ up to 2000 people during construction and 700 once operational.
OZ Minerals’ gave the green light to its $916 million Carrapateena mine, north of Port Augusta, in August, while BHP has pledged to support Upper Spencer Gulf businesses as its FY17 $600 million investment into its Olympic Dam mine ramps up.
In addition, there were a number of graphite mines planned for the region.
Lincoln Minerals hopes to begin development at Kookaburra Gully in the 2018-19 financial year, and Renascor Resources is pushing hard to get its tier 1 asset Siviour up and running.
Then there’s the strong renewable energy push; in August, the State Government announced a new $650 million solar thermal power station in Port Augusta to help fill the energy void.
Due for completion in 2020, the Government estimated 700 jobs during construction and 50 ongoing positions.
In late October, GFG Alliance’s Mr Gupta also made some big energy announcements.
GFG Alliance subsidiary ZEN Energy would build 1 gigawatt (1000 megawatt) of dispatchable renewables in and around Whyalla, 100MW/100MWh battery storage facility at Port Augusta, 100MW of demand response at the Whyalla steel works and other sites, and a 120MW/600MWh pumped hydro storage facility at a disused iron ore mine pit in the Middleback Ranges.
Mr Gupta also promised an additional 480MW of solar capacity in due course.
A region in transition
Through the Upper Spencer Gulf’s shared struggles, Ms Breuer said the cities had put rivalries aside and now worked together more closely.
“All three communities have been in crisis in the last couple of years,” Ms Breuer said.
“Out of trauma and tragedy comes a stronger working relationship.
“We’ve always had a little bit of rivalry between the three cities, but we’ve basically put that aside now and decided we need to work together – we need to complement each other.
“We communicate almost daily about what’s happening in our areas, and while there will still always be an element of competition, there’s plenty of room for all three of us.”
This partnership between cities was cemented at the annual Sustainable Economic Growth for Regional Australia’ (SEGRA) national conference in October, held in the Upper Spencer Gulf for the first time in the conference’s 20-year history.
“I was thrilled to bits to have so many delegates from all over Australia say to us ‘you are a model for the rest of Australia of communities strengthening their numbers by working together and actually being successful in what you’re doing’,” Ms Breuer said.
“A whole range of new industries are starting to look into coming to our area.”
According to the Upper Spencer Gulf Common Purpose Group, an alliance between the three local Governments, one of the region’s biggest challenges in the past had been its reliance on single industries dependent on global influences.
Metal mining and processing had been a key pillar supporting the region since its inception, but the group remained confident this will change over time as the region diversified into new industries.
“Basically in the past we have been engineering and mining,” Ms Breuer said.
“We now are broadening; we are broadening into the health areas, into education, the renewable energy area, and defence is a huge item for us at the moment.
“We’ve always had a little bit of rivalry between the three cities, but we’ve basically put that aside now and decided we need to work together – we need to complement each other.”
“We have got an area of land between Port Augusta and Whyalla that has been taken over by the defence forces and they are doing all of their training exercises in our area now.”
The renewable energy industry was also a big ticket item for the region’s growth, with Whyalla now undertaking a lot of the work for the towers and turbines for wind farms.
“We’ve also got a company that is interested in moving to Whyalla to set up a helicopter training school which is going to be quite amazing for us in the future if that gets off the ground,” she said.
“And then there’s a whole lot of other companies — transport companies for example — that are moving in.
“In the last three months since the Arrium announcement, we’ve started to get a whole lot more companies that are talking to us again with a view of setting up in our region. All three cities have noticed this.” Yet mining remained a key pillar. Ms Breuer said a substantial amount of money was currently being invested in the region, particularly in prospecting and the development of new projects.
“At the recent Upper Spencer Gulf Global Maintenance Conference there were a number of new mining projects discussed,” she said.
“It was really quite exciting because even if only half of them get off the ground there’s jobs and services for our region.”
Building a national hub
While confidence was returning to the region, the three cities still recorded a below average number of technical, scientific and professional and business services enterprises.
According to the local Government alliance, building local capacity in these areas was vital to promote growth for a more diversified economy.
Ms Breuer said given the Gulf’s proximity to South Australia’s prospective mining projects, the region was ideally located to become a hub for innovation, applied research, skills and training for the mining sector.
Developing the region as a heavy industry hub was also high on the agenda.
“The three Spencer Gulf cities have a fairly common heritage in that we all have a fairly strong engineering background,” Ms Breuer said.
“With this common heritage, we have common skills across the three cities and are able to use them for development of future projects.”
Ms Breuer said there had also been a lot of discussion about investing in transport infrastructure to reposition the region as a national transport and logistics hub.
At present, the Port Pirie and Whyalla ports were both underutilised, with the region seeking greater access and use of these facilities.
“There’s been a lot of discussion about this and working close with State and Federal Government on this,” she said.
“The isolation of our region is one of our biggest problems, we are a long way from anywhere, so those back up services there and a good transport system will certainly make it more attractive for the companies coming in, particularly for the transport of goods and services and workers.
Ms Breuer said she was proud of the region and the recognition it received at the SEGRA conference.
“We know that we are making things happen in our region, and look forward to a confident future for our children and grandchildren,” she said.
“In the last three months since the Arrium announcement, we’ve started to get a whole lot more companies that are talking to us again with a view of setting up in our region. All three cities have noticed this.”
GFG Alliance. Photography: Sean Kelly.
GFG Alliance. Photography: Sean Kelly.
GFG Alliance. Photography: Sean Kelly.
Whyalla Mayor Lyn Breuer.