891 Adelaide

E&OE TRANSCRIPT
Interview on 891 ABC Adelaide with Matthew Abraham and David Bevan

05/04/2016

Subject: Potential closure of Arrium steelworks in Whyalla

David Bevan: Christopher Pyne is the Federal minister for Industry, Innovation and Science, Federal Member for Sturt, he joins us now. Good morning Chris Pyne.

Christopher Pyne: Good morning David, good morning Matthew.

David Bevan: Chris Pyne, are you going to let Arrium and Whyalla fall over?

Christopher Pyne: Well we are doing everything in our power and have already done things to help Arrium from the Commonwealth Government. For example, I’ve toughened up our approach to anti-dumping laws in this country and applied them in a much tougher headed way than have been applied in the past. We bought forward the purchase of 72,000 tonnes of steel for the Tarcoola Adelaide rail line, which Malcolm Turnbull announced when he was here in Adelaide a month ago, and Malcolm spent the weekend talking to the banks to stop them from taking any precipitated action against Arrium. So we have been incredibly hands on.

My department, Martin Parkinson, the head of Prime Minister and Cabinet have been sitting in the room with the banks and Arrium and others, bringing them to a better position …

David Bevan: [Interrupts] Okay, now if all of that, though, if all of that is not enough, will you do more because you’re not going to let it fall over?

Christopher Pyne: Well, what would you suggest, David?

David Bevan: Well I’m asking you. You’re the Minister, you wanted to be the Minister for Industry, you got the job, and I’m asking you, will you do everything to make sure it doesn’t fall over?

Christopher Pyne: Well we are doing everything we can to make sure that it doesn’t fall over. Now we’re not going to buy the company. I agree with Tom Koutsantonis, I mean that, in the end of the day, you’re basically saying we should buy the company with taxpayers’ money and run it as a national business. Well we’re not going to do that.

David Bevan: No, I’m trying to find out what the parameters are here. How far will you go so that the workers …

Christopher Pyne: [Interrupts] Well the parameters are that the problem is the business has far too much debt, and the management of Arrium have allowed that debt to get hopelessly out of control, and they wanted to recapitalise their debt with the GOS offer, which was unacceptable to the banks. Now this is a private business; it’s not a government operation, and if their debt is such that the banks want to call it in, that is a matter for the banks, and you can understand why they want to do that …

Matthew Abraham: [Talks over] So there’s a limit to what you can do? You can’t work a miracle.

Christopher Pyne: We can’t work a miracle, but we are doing what we can. I’m very grateful that the State Government’s considering putting some money on the table. They haven’t yet, by the way, but Arrium need to explain to the State Government what they want.

Matthew Abraham: [Talks over] Are you going to put money on the table?

Christopher Pyne: Well we have. We bought forward the purchase of 72,000 tonnes of steel. That’s worth $80 million of contract. We’ve imposed duties on Malaysian, Taiwanese and Chinese steel that was circumventing the anti-dumping laws, and I have an inquiry which will report to me soon on the impact of Chinese steel in the market.

Matthew Abraham: Okay.

Christopher Pyne: I’m using all the levers at my disposal to help Whyalla, but let me say this – if- the worst thing that could happen would be voluntary administration and a stripping of the company, but the banks do not want to close down Whyalla, because that business could easily run at break even or profit. The problem for Arrium is the debt. It’s not the actual underlying business. Even the iron ore part of the business, with iron ore prices recovering could be- could run at a profit or break even.

Matthew Abraham: [Talks over] Okay, that’s a bit like – I mean, that’s a little bit like saying you know, we’ve got a good government, it’s just no one likes us, according to Newspoll.

Christopher Pyne: No, no.

Matthew Abraham: I mean, you know, it’s a good company, but it- it makes nice steel, but it’s got a lot of debt it can’t manage.

Christopher Pyne: No, no, no, the point I’m making, which is a very sensible one, is that the banks wouldn’t just close down Whyalla, because they’d actually rather trade out of the difficulties. They’d rather get their money back. Now what was being offered by Arrium was 45 cents in the dollar to the bank, and the bank said we think we can do better than that.

Matthew Abraham: Okay that was a private equity offer correct?

Christopher Pyne: Yes that was part to the loan.

David Bevan: [Talks over] Okay, okay, who is calling the shots here? Who is actually controlling the agenda? Who can stand up in a meeting today and say right this is it, we’ve made the decision?

Christopher Pyne: Well that’s the banks because the banks are the ones who have the debt with Arrium, and they’re not satisfied with the offer that the Arrium management have made to them. But the point I would make to the workers of Whyalla, who are my only concern by the way, I’m not in the least bit interested in the management of Arrium’s worries, or the shareholders of the banks, I’m concerned about the workers at Whyalla. But the banks do not want Whyalla and the rest of the business, the steel products part of the business, or even the iron ore business to close, because if they can trade out of their difficulty they get all their money back.

David Bevan: Okay Tom Koutsantonis have the banks signalled to you that they’re prepared to allow this to go on for how long?

Tom Koutsantonis: Well they haven’t told us for what period of time. But Christopher is right, and I also want to take this opportunity to thank him because the Commonwealth Government have done an exceptional job in supporting the state, and Christopher’s personal intervention has been very, very important. The banks ultimately will do what’s in their interest, Matthew’s right about that.

David Bevan: Yeah but are they talking days, weeks, months? How long... how much patience have they got here?

Tom Koutsantonis: Well lots, because there’s a lot of money at stake. If they run out of patience they also then lose a lot of money.

David Bevan: So you think we could be doing this for another six months, a year?

Tom Koutsantonis: Look I don’t know, and it would be misleading for me to tell your listeners a date.

Matthew Abraham: If I was a worker at Arrium I’d be thinking we’re in more trouble than even we thought because Tom Koutsantonis is being nice to Chris Pyne.

Christopher Pyne: [Indistinct].

Tom Koutsantonis: Well I mean the truth is, is what do I... Look if Chris Pyne was doing something that I thought deserved to be criticised I would say it.

Matthew Abraham: Yeah, yeah.

Tom Koutsantonis: And he’s just not.

Christopher Pyne: And he has plenty of times.

Tom Koutsantonis: Yes I have many times Christopher.

Christopher Pyne: [Laughs].

Matthew Abraham: When are you going to put your money on the table? That is one point Chris Pyne was critical of.

Tom Koutsantonis: No and he’s... look I understand Christopher’s point, my point is I’m not going to rush in, I’m going to wait to make sure that there’s a long term plan.

Matthew Abraham: Okay. Why has the Premier sailed off on another jaunt to China with about the world’s largest trade delegation, with two camera crews I think this time, paid for by the taxpayer, when Whyalla’s going down the gurgler?

Tom Koutsantonis: Well Whyalla’s not going down the gurgler.

Matthew Abraham: I mean if there was a bushfire he wouldn’t head off.

Tom Koutsantonis: First and foremost a trade mission to China to grow our economy is the right thing to do, and quite frankly...

Matthew Abraham: [Interrupts] Martin Hamilton-Smith could handle that.

Tom Koutsantonis: Well no, I think it’s important that the leader of our Government is there.

Matthew Abraham: Oh okay, so more important that he’s over there?

Tom Koutsantonis: Well I mean we couldn’t... you know the threat [indistinct]...

Matthew Abraham: [Talks over] I mean he’s doing one thing over there to save one job...

Tom Koutsantonis: There is wonderful things called telephones where we can be in constant communication and talk to each other about what’s happening. The Premier is fully aware of what’s going on, he’s making phone calls, he’s speaking to the Prime Minister, he’s talking to the banks, he’s speaking to our advisors, he’s in complete contact with us. He’s not gone somewhere where he’s out of contact.

Matthew Abraham: Where your feet go so your head goes. I mean his feet are in China.

Tom Koutsantonis: Well my head’s not in the ABC.

Matthew Abraham: Well his... we get into your head though.

[Laughter]

Tom Koutsantonis: You do, you do.

Matthew Abraham: Okay look Treasurer so this is now- this is with the banks is what you’re saying, and the only card the workers and the town and the government has got is that the banks don’t want to lose any more money. So if there’s a chance of getting their money back...

Tom Koutsantonis: [Interrupts] Well if you’re right Matthew, and the banks, all they care about is their balance sheet, then they’ll work this out to keep the company operating.

Matthew Abraham: Tom Koutsantonis thanks for coming, thank you Treasurer.

David Bevan: And thank you Christopher Pyne, Federal Minister for Industry, Innovation, and Science.

[ends]