E&OE…
Topics: Arrium; meeting with Posco; Automotive industry
IAN HENSCHKE:
But first today, to the Korean steel mission. Greg Hunt joins us now and I believe he's on a train between Pohang and Seoul. Is that right, Minister?
GREG HUNT:
That's exactly right, Ian, your intelligence is spot on. So, I've just left Posco.
POSCO is the Pohang iron and steel company and I was there with Tom Koutsantonis, obviously representing South Australia, and also with Scott McDine who's the head of the Australian Workers' Union.
So, we went as a single team to fight for and represent Arrium and Posco, most interestingly, doesn't just want to acquire Arrium, they want to invest in new technology.
They call it the FINEX technology, which would be a massive expansion, a 50 per cent expansion in the capacity of Arrium.
They think very highly of the workers and when they come they're looking to invest for 50 years.
So, we've presented all the things that the Australian Government, the South Australian Government, and the workers could do and they're a deadly serious bidder.
So, I came here hopeful, I come away confident that Arrium has a real long-term future.
IAN HENSCHKE:
And this company, I understand, has also invested in places like Pittsburgh in America where they have had a downturn in their steel industry as well and I'm told that it's one of the largest steel makers in the world, so they would be, in a sense, becoming a multinational.
They'll have steel mills in Korea, steel mills in America, steel mills in Australia, that's what they're planning to do is it?
GREG HUNT:
Yeah, so the plant that we visited at Pohang makes 16 million tonnes of steel a year. They make 38 million tonnes of steel every year and they're world's best practice.
What they have developed is a new technology which doesn't require a blast furnace. It therefore takes a three-stage process down to two.
That means they produce the steel a lot more cheaply and they can increase the quality so this is an example of innovation [inaudible] protect jobs, it creates jobs, so they want to invest in a big way.
IAN HENSCHKE:
I think you might be just dropping out there on the train but we'll just keep talking.
We're talking to Greg Hunt, Federal Industry Minister who is in Korea at the moment travelling on a train just away from Pohang.
Which of course is the headquarters of Posco which has got steel investments in the United States, it has investments also in China, a big investment in China.
It's investing in India as well and the Minister hopes, and I imagine Tom Koutsantonis who's travelling with you, hopes that there will be an investment made with Arrium here in South Australia.
So, have you signed anything at all, Greg Hunt? Have you signed a letter of agreement or anything that we can hang our hat on?
GREG HUNT:
So, we've provided a letter of support. South Australia has done a similar thing. The decision has to be made not by us but by the administrators of Arrium.
So, what does the Australian Government want and what does the South Australian Government want? We want to make sure that the administrators make a decision which will protect the jobs of the workers and give the opportunity for investment.
So, they're going through their own deal process but I've got to say this was a heck of a good offer and a heck of a good opportunity.
And it's an example of real heavy industry innovation, because we want to keep and build jobs in South Australia and in particular in Whyalla and I am hopeful about the future, confident about the future of Whyalla now.
IAN HENSCHKE:
What do you think about being on a train rocketing along like that?
I mean, I note that in the news today they're saying that there are 44 new staff at the steel works because of increased demand and this is to fix up the Tarcoola rail line upgrade.
I mean, if we did go ahead and build some more rail infrastructure, high speed train lines, for example, have been talked about, is it possible that while you're over there you could investigate that as well?
I mean there are obviously big opportunities as the population of Australia has now gone, well in my lifetime, it's probably almost doubled or almost tripled.
GREG HUNT:
Well, the first thing is, we are as we speak on a very fast train.
They call it the KTX and that's between Pohang on the East Coast and Seoul effectively on the West Coast and it's just sort of ripping across the line, across the country, but in a very quiet, almost silent way and …
IAN HENSCHKE:
Well, wouldn't you like to do that to go from Canberra to Melbourne or wherever else you've got to go on a fast train? I mean, wouldn't that be a better way travelling?
GREG HUNT:
So, in fact, one of the things that just as a cabinet, and with the Prime Minister, we'll put forward is developing the idea of a Melbourne to Sydney potentially Melbourne to Brisbane and in time that has the potential for South Australia, a very fast train.
I think now is the moment when this can and should be considered. The reason it can be done is the property up west in places like Benalla and Wangaratta, Albury, Wodonga, Goulburn, that's where the real source of funding is.
Obviously, we've helped with the railway in South Australia. As you say, that's created additional jobs there and about $70 million worth of uplift in value to Whyalla, so that's helping.
But a national railway line I think would be a, very fast train, would be a great national project, so as long as the numbers stack up, but it's the property which allows that to have a real shot. So that's …
IAN HENSCHKE:
And it also …
GREG HUNT:
All these visions [inaudible] come together.
IAN HENSCHKE:
Yeah, and it also means that some of those country towns where people live, they might be two or three hours away from a city but, if you have to sit in traffic for the last hour, and you can get on a train and be there in half the time, they make them almost important places to do businesses, don't you? I mean, you can actually …
GREG HUNT:
Well, how does Australia expand without being obsessed by five big cities?
And the way you do that is you've got to have regional cities which are going to expand …and there you go, you can hear the Korean train station, the Korean railway system talking but you've got to have regional cities that can expand, and if they can commute to the capital cities through a very fast train, this is a realistic vision of Australia's future over the next 30 and 50 and 100 years.
IAN HENSCHKE:
Just quickly on this process you're going through at the moment, when would you have an answer? Because there'll be people sitting here listening to this and saying well, when will we know?
GREG HUNT:
So it's in the hands of the administrators. I hope that they can reach a decision in the very near future.
We'll be conveying our information back to them, but we're just working as a team to try to get the best outcome in terms of jobs and growth for South Australia.
I know that Rowan Ramsey, obviously the Member for Grey, from day one in my job, he made this the most important thing in my job, and it does matter, because you bring everything together.
Jobs, innovation, the future of the country, and it looks like there's a potential for a massive investment in South Australian production to take it to being world-leading.
IAN HENSCHKE:
Alright. And finally, we spoke to you last Friday when you were in Detroit, and you were talking to Ford and GM, and then you went to Tokyo as well to talk to Toyota.
I saw a bit of that on Lateline the other night. But have you been able to come back with any good news for the car industry as well, especially out of your talks with Toyota?
GREG HUNT:
Yeah, so most particularly I think that Ford will maintain a very significant workforce, probably 1600 in Australia, built around design and engineering.
And GM will have a significant workforce, and Toyota will have a smaller R and D component, but we're really pushing them, frankly, we've put the very hard word on them, to create a Toyota opportunities program for component manufacturers.
For South Australia and for Victoria that's important, and I'm hopeful that both Ford and Toyota will provide real opportunities for component manufacturers, and Ford and GM will maintain long-term commitment to an Australian car industry in the design and R and D space.
So what's the future for Australia's car industry? Design, R and D, component manufacture as part of a global supply chain.
IAN HENSCHKE:
Right. And a quick one from one of our listeners. They would like to know, what about the power supplies for Whyalla?
Can you guarantee, I mean, if they've been reading anything about some of the problems we've had in South Australia, can you guarantee if they're having a steel mill there they'll have sufficient power to run it?
GREG HUNT:
Oh, well. This is actually perhaps the most important part beyond the jobs and investment. They are proposing, Posco is proposing a 220 megawatt power station from the gas which is created by their FINEX process.
So their new technology creates a gas which they're harvesting here in Korea and using to drive their power station.
The beauty of this 220 megawatt gas station is half of it would be used for their own operations, and half of it would provide base load, low emissions, completely stable electricity for the grid beyond Port Augusta.
So after Port Augusta, it would actually be feeding back into the grid, providing base load and stability for South Australia.
IAN HENSCHKE:
So it would power Roxby Downs, for example, which is an area that was caught out recently with the power blackout?
GREG HUNT:
That's exactly right. So I'm impressed …
IAN HENSCHKE:
It sounds, it sounds almost too good to be true, doesn't it? You end up getting a steel mill and a power station.
GREG HUNT:
When Tom and I saw that, we just looked at each other and then we tested them, we asked them hard questions.
And then they took us to the actual power station being generated by the very type of advanced steel-making technology which they're proposing to put in Australia.
So they need 1200 megawatts, you know, an enormous quantity, for their piloting plant. They create 900 megawatts on their own.
More than half of their plant is with the older steel technology, but now built over 4 million tonnes of almost 4 million tonnes of new technology steel-making capacity, and that's creating electricity for the vast bulk of their plant.
They pick up the same technology and the same electricity generation, and it is a real sense of innovation, creating jobs, creating investment, and in this case, creating base load electricity.
Rowan Ramsey talked me through this a while ago, and I thought, extraordinary, and he was onto it before any of us.
IAN HENSCHKE:
Alright. And look, just this is a yes or no question, because we're almost out of time, but someone wants to know, is there an administrator travelling with the group in Korea to hear all this?
GREG HUNT:
No. The administrator has met separately with Posco. What we wanted to do was come as combined Governments and workers to say whatever you're working on with the administrator, here are the things we can do to help.
IAN HENSCHKE:
We support you. Okay. Alright, thank you very much for your time this afternoon.
Really appreciate it. Greg Hunt, Federal Industry Minister there, giving us an update on that trip that he's taking at the moment with State Treasurer Tom Koutsantonis in Korea. We'll keep you posted on that.
(ENDS)