Whyalla Steel Works (Environmental Authorisation) Amendment Bill

The Hon. D.W. RIDGWAY (Leader of the Opposition) ( 15:24 :21 ): I rise to be one of a number of speakers, I think, by looking at the Notice Paper, to speak on this bill. On behalf of the opposition, I indicate that we will be supporting the bill, but I know two of my colleagues have some other contributions to make. Essentially, this bill is about maintaining Arrium's confidence in the state's regulatory regime as it faces many challenges to its Whyalla operations in the coming years.

Arrium (or OneSteel, as it was known) is essential for the future of Whyalla, and it is undertaking a root-and-branch review to maintain and enhance their operations in Whyalla. We are all aware that the current economic climate internationally and nationally, especially in South Australia, is particularly tough for businesses, and Arrium is going through a fairly significant review of its operations.

The company's decision to half its mining operations in South Australia will have a significant impact on our economy and jobs. With extremely low commodity prices, coupled with our ailing manufacturing sector, it is imperative that we give existing operators confidence through any means that are practicable and reasonable.

The key component of this bill is that it seeks to extend for another 10 years the requirement for Arrium to be accountable to the Department of State Development for all environmental regulations at the steelworks, rather than to the EPA. I remember that we had a bill go through this parliament nearly 10 years ago. I think this one expires on 4 November, so it is a little short of the 10 years. I think that the long-term plan, even back then, would have been for the EPA to be the regulatory authority.

While the bill is sensible and necessary, the government has been typical in its rushed timing, taking it for granted that parliament can rush a bill through at any time before the 10-year expiry. I think that is symptomatic in that often we see in this place this panic that suddenly there is an issue and we have to resolve it and that it has to be passed today, which we are happy to do, but we could easily have had much more time. We have known for 10 years that it was going to expire on 4 November, yet there is a rush.

The department did not facilitate the opportunity for this bill to be thoroughly considered by the opposition as it had not been provided with the bill when it was first listed for debate in the other place. We are told that Arrium approached the government seeking the extension of the environmental authorisation.

Understandably, the government being sensitive about our economic position and the financial difficulty being experienced by Arrium, they were prepared to make a negotiation. I might add that they are also in a difficult political position because they have failed to cultivate the business environment where the current economic threats can be mitigated. Arguably, many businesses which have folded would have survived if the government had been more nurturing, more sympathetic and more understanding of how tough it is to do business in this great state. So, the government is under even more pressure to save our existing industries in any way possible.

As I said earlier, it was in 2005 that the South Australian Parliament enacted amendments to the Whyalla Steel Works Act 1958, including the addition of section 15, where Arrium was granted environmental authorisation under the Environment Protection Act 1993. It gave the company the regulatory certainty it needed to enable it to diversify into the resources sector, through Project Magnet, which would convert the Whyalla steelworks to magnetite iron ore feed, creating a new revenue stream for the company by making available hematite iron ore for export sales.

The successful implementation of Project Magnet essentially provided a new lease of life for the Whyalla steelworks and significant environmental improvement with respect to the red dust problem. As we would all recall, there has been a constant stream of questions in this place and the other place about the red dust issues in Whyalla. Arrium's confidence in the regime also resulted in further investment in the port and mining operations.

With the environmental authorisation about to expire, the section is to be varied such that the expiry will occur on the 20th anniversary, rather than the 10th anniversary, of the section being enacted, taking it to 4 November 2025.

Arrium is currently undertaking a broad strategic review of its business as a result of the low global iron ore prices now prevailing. It has already curtailed significant mining in South Australia, writing down some $1.3 billion in costs. Obviously, this has led to reduced exports for the financial year 2014-15. It was predicted in January that exports would fall from about 12.5 million tonnes of 60 per cent iron to about nine million tonnes of about 69 per cent iron.

The government is working with the company to assist it to minimise its costs and maintain financial viability. They had aimed to cut total production costs by about 20 per cent to around $57 a tonne by 2016. In these circumstances, the proposed extension of the environmental authorisation provides continued regulatory certainty for Arrium and directly contributes to the prospects for its business sustainability in Whyalla and Upper Spencer Gulf. Arrium has agreed in writing to work with the EPA over the 10 years to transition to a 'normal' EPA-issued long-term licence.

Apparently, the department has seen a letter from OneSteel's general manager at the Whyalla Steelworks to the EPA outlining that commitment. I think that is the key to this. We have a situation in place. They need a 10-year extension. Times are particularly tough. If we were to have a new regime it would provide some uncertainty but also, I suspect, quite a lot of cost on this particular company. We have been happy, as a state, to have it operate in that fashion for the last decade. It will go on for another decade but I think that any of us who are still here in another 10 years time will need to make sure, at that point in time, that they do transition to a normal EPA-issued long-term licence.

The second part of the bill is the insertion of a section which has provisions for schedule 3 of the act (environmental authorisations under the EPA) to be updated to reflect the variations in the environmental authorisation at the request of the minister. We are pleased to see that the EPA maintains a good relationship with Arrium, which is so important in terms of Arrium's willingness to continue business in South Australia. Again, I reiterate that the opposition supports the bill and sincerely hopes the government will endeavour, when making amendments which could have such serious implications for the state's economy, to facilitate a more thorough consideration by providing information to us, as the opposition, in a timely manner.

I should also add, to be on the ball and alert when this sort of legislation is about to expire, that we have some lengthy period of time to examine it. I know it was examined briefly by a select committee in the House of Assembly. There was some criticism of that relatively small time frame and it was not particularly widely advertised. If the government had been on the ball and realised this was happening some six months ago we could have done it quite thoroughly. We would probably have had the same outcome but could certainly have answered some of the questions that may not have been answered. Given the tough economic times the opposition is happy to support the bill.

 

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