Australia’s coalition government will provide A$49.2 million ($36 million) to support struggling steelmaker Arrium Ltd., Prime Minister Malcolm Turnbull said.
The funds will be spent on new machinery at two mines in South Australia to help Arrium remove waste materials from its iron ore, Turnbull said in a statement Sunday. The equipment will enable Arrium to convert low-grade ore stockpiles into export quality and increase the supply of lump ore feed to the Whyalla steelworks, he said.
“It is a practical ‘no regrets’ investment which will lower the cash cost of iron ore production in the near term and supports both mining and steel making and the jobs which depend on them,” said Turnbull, who is bidding for re-election on July 2.
Arrium was placed in administration in April after lenders rejected a A$927 million recapitalization plan. The investment is designed to improve cash flow and profitability, and will support about 2,700 workers at the steelworks, Turnbull said.
The funds will be advanced as a loan and secured against the new equipment which Arrium’s administrators advise can be in operation by February, according to the statement. The machinery is expected to add A$241 million to the company’s cash flow over the next five years, the government said.