Cluster Background and Activity

Industry clusters are a well-established tool for enhancing economic development.  The Whyalla and Eyre Peninsula Heavy Industry Cluster project was initiated by Regional Development Australia Whyalla and Eyre Peninsula (RDAWEP) in mid-2015 in response to a need for action to address poor operating conditions experienced by major businesses in Whyalla and the Eyre Peninsula.  These difficulties were largely caused by the falling commodity of price of iron ore and import of cheaper steel from China.

The cluster was established to support growth and sustainability of heavy industry businesses, manufacturing businesses and the associated supply chains.

The cluster is industry lead and Chaired by Mr Theuns Victor, General Manager of Liberty OneSteel.

The cluster consists of a core leadership group of 9 Chief Executive Officers of major regional heavy industry businesses and CEO level participation from Whyalla Council, RDAWEP and the Deputy CEO of the South Australian Government Department of State Development (DSD).  There is additional ongoing engagement with a further 52 supply chain companies, largely based in Whyalla.

Difficult operating conditions for these businesses continued through 2016, driven by sustained low commodity prices, which brought mining, manufacturing and infrastructure construction to a standstill. This situation was exacerbated when Arrium Ltd, the region’s largest single employer, entered into voluntary administration in April 2016, with debts of $2.8 billion. Most of the company’s supply chain businesses in Whyalla became unsecured creditors, with substantial amounts of money owing to them.

This caused a ripple effect throughout the Whyalla and regional economy. Business confidence, spending and investment dropped to unprecedented levels. Many businesses were forced to rationalise their operations and downsize workforces, while some others closed or left the region.

Work by the Cluster Leadership Group, supported by RDAWEP, continued on multiple fronts via regular bi-monthly meetings during 2016. A rolling 3 month action list was continually updated and presented at meetings to report progress.

The Heavy Industry Cluster Group continues to identify constraints to business growth, sustainability and competitiveness and is developing actionable solutions to accelerate growth and capture new opportunities for business development.

A Brighter Future

During 2016, the Arrium administrators, KordaMentha, worked with the State and Australian Governments to keep the business operating so that it could be re-structured and sold as a going concern. A bidding process commenced in the second half of 2016. This concluded with the announcement of London based GFG Alliance as the successful bidder on 4 July 2017.

Future plans include a vision to create a vertically integrated and sustainable industrial business that encompasses mining, metal recycling, primary metal production, engineering and distribution, and also includes the use of renewable energy. Green shoots of recovery are also emerging more generally with the improvement of commodity prices and multiple major regional projects under planning development.

Cluster Development

Manufacturing and mining underpin Whyalla’s economy. In the vicinity of one-third (33.6%) of Whyalla’s workforce (over 3,000 jobs) is employed in mining and steel making, and substantial additional employment is generated in businesses providing contract and support services.

Whyalla has numerous heavy industry companies and substantial engineering skills capability.  These are valuable assets.

Strategic direction for 2016-17 was established by the Cluster Leadership Group in early 2016, and included actions in three specific focus areas:

1. New opportunities:
Identifying, pursuing and promoting new business opportunities across 3 streams.

  • Defence projects, including access and accreditation.
  • Collective bidding – i.e. how to structure and market to enable joint bids for new opportunities.
  • Other opportunities for Whyalla, including mining, resource processing and renewable energy.

2. Training and workforce development with a focus on trade skill sets:
Building capability for Defence and heavy industry projects, including vocational training and industry placement.

3. Ultra high speed internet:
Enabling commercial access to very high speed broadband, similar to the Northern Adelaide Gig City concept (utilising an existing fibre optic network).

Other Initiatives

Other initiatives progressed during 2016-17 included:

  • an investigation and feasibility assessment of Defence asset reprocessing in Whyalla;
  • ongoing engagement to build linkages with the Defence industry to improve regional business access to Defence projects (including component manufacture), and the supply of goods and services to training operations at the expanded Cultana Defence Training Area adjoining the City of Whyalla;
  • capability mapping, including identification of opportunities for the growth and diversification of Whyalla businesses;
  • strengthened engagement with State and Australian Government agencies to better facilitate regional opportunities and communicate regional issues and impediments; and
  • investigation into the reduction of recurrent production costs, including energy and water costs.


The Heavy Industry Cluster Group is one of many strategies being implemented to diversify Whyalla’s economy. The circumstances that led to Arrium going into voluntary administration highlighted Whyalla’s economic vulnerability and over-reliance on the mining and manufacturing industries.

The value-adding initiatives being pursued by the Cluster Group will not only strengthen existing industries, but will provide opportunities for new product development and business growth.

Impact of the Project, Key Outcomes

Multiple forums, workshops and project briefings were facilitated in Whyalla targeting local and regional business managers. These included Australian and State Government agencies and a range of commercial project proponents seeking to develop capable supply chains. These forums improved understanding of the requirements to bid for work on a range of projects.

Many of the businesses involved have expressed intent in pursuing opportunities beyond their traditional customer base – i.e. into the Defence industry and renewable energy sectors. The information transfer process was supplemented by RDAWEP attendance at Adelaide-based Defence industry briefings and the establishment of formal relationships with the SA Defence Teaming Centre and Defence SA. One outcome is that cluster businesses are now regularly provided with information about Defence industry and other opportunities. Another is that government agencies are much better informed about regional capabilities.

The Heavy Industry Cluster worked on a range of initiatives to pursue its longer term goals, including:

  • collaboration with TAFESA and DSD to establish a multi-trade vocational training program. The program involves multi-trade technical vocational training combined with supervised industry work placement to develop practical work skills. The project was developed to address a significant shortfall in trade apprentice training from the sudden decline of mining and construction investment in Australia, combined with the extended period of low commodity prices;
  • a project to enable commercial access to ultra-high speed broadband via UniSA’s AAR Net network. This project was identified as a high priority to enhance industry capability with projects which rely on data rich IT systems;
  • a subgroup of the Heavy Industry Cluster was established to investigate formal collaboration, including collective bidding. Multiple meetings were facilitated with supply chain companies to progress this concept;
  • several proposals were developed and submitted to State Government agencies to provide the resources to support industry development projects. This included proposals to help establish regional supply chain hub centred in Whyalla to develop and strengthen links between proponents of major projects and regional suppliers; and
  • proposals to support the delivery of the multi-trade vocational training program have also been submitted and are currently being considered.

Leave a Reply

Your email address will not be published. Required fields are marked *