The South Australian and federal governments have announced a sweeping rescue package for Australia’s steel industry, with $2.4 billion promised to save the Whyalla Steelworks.

But a major state government project has been shelved for the dream to come true.

Following Wednesday’s unprecedented action to force the Whyalla Steelworks into administration through special-purpose legislation, the SA government teamed up with the Commonwealth on Thursday to announce a $2.4 billion support package for the state’s steel industry.

But the state government’s $600 million green hydrogen project – planned to complement the steelmaking operations in Whyalla – had been deferred, Premier Peter Malinauskas said.

JoiningPrime Minister Anthony Albanese at the steelworks in Whyalla on Thursday, Malinauskas rejected the idea that South Australian taxpayers were on the hook for billionaire industrialist and now-former owner Sanjeev Gupta’s failed business.

“I can appreciate how elements of the media will be attracted to that chain of reasoning, but it is patently wrong,” Malinauskas said.

“There is no bail-out here of GFG, their debts aren’t going anywhere.”

Instead, the plan is to use taxpayer funds to make “creditor assistance” payments – $50 million worth. In exchange, Malinauskas said, creditors who accepted a payment would forfeit their dividend from the administration back to the state government.

“What we’re doing is we’re relieving them of all the burden and the struggle associated with the administration so they can get on with doing what they do best – and that’s keeping this place running and making steel in this country,” he said.

But it remains to be seen how much a dividend from the administration will be worth. As history shows, it’s never the case that creditors receive a dollar back for a dollar owed once the process is settled.

Nevertheless, taxpayers will pay for an upgrade of the Steelworks – something Gupta had long promised.

It includes $32.6 million in “immediate, on the ground” infrastructure upgrades and a “jobs matching and skills hub” worth $6 million.

The SA and federal governments will also invest a further $384 million to keep the steelworks operating during the administration – which explains what Malinauskas meant on Wednesday when he said the administration was “fully funded”.

The kicker is $1.9 billion of state and federal funds that will be invested alongside the new owner on upgrades and new infrastructure for the steelworks’ future.

There’s still little clarity on whether or not the federal government will nationalise the facility.

Asked about that on Thursday, Albanese simply listed the plant’s positive elements and agreed with Malinauskas’s position that “we’re very confident … we can get not just any steelmaker, but the right steelmaker to be committed”.

To keep the Treasurer happy, funds are being diverted from the SA government’s planned $600 million green hydrogen plant, which has been “deferred”.

Malinauskas said it still had a future, but committed to nothing beyond that.

The project would have created the world’s largest hydrogen electrolyser at Whyalla, which would’ve powered green steel manufacturing at the steelworks.

How Whyalla’s transformation into a green steel-producing facility will come remains to be seen.

There’s also the question of the gas turbine for the hydrogen plant that the government bought with ATCO in November last year. Malinauskas promised “further announcements on that in the not-too-distant future”.

In any case, the Office of Hydrogen Power will continue to exist without any concrete plans.

“The reason why we were building the hydrogen facility in Whyalla was because there’s a steelworks here… that was what Mr Gupta said he wanted,” Malinauskas said.

“We’re willing to do what it takes to make sure that vision comes to fruition.

“The future of hydrogen is there and it’s clear that people appreciate the necessity of it. I guess what we’ve got to make sure is that we’ve got an iron and steelmaking business that is there in the first instance.”

Workers at the steelworks appeared happy in Whyalla on Thursday.

Ahead of the announcement, Malinauskas spoke to more than 100 steelworkers, who welcomed the coup of Gupta.

He and Albanese also spent about 10 minutes taking selfies with staff who were happy to be free of the billionaire. They were thanked, cheered and praised.

The city-saving package was a hit. How it will play out remains to be seen.

This story first appeared in InDaily. Read the original here