Arrium Sale Blow as Workers Reject Pay Cut

Thursday, August 25th, 2016
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The future of troubled steelmaker Arrium has been plunged into further uncertainty after workers at the company’s Whyalla operations rejected a proposed pay deal.

A slim majority of Whyalla steelworkers on Wednesday voted down a new enterprise bargaining agreement which included a 10 per cent pay cut and changes to superannuation.

Mining workers at Whyalla separately voted in favour of taking the same pay cut but administrators KordaMentha have ruled out implementing one pay deal without the other.

It’s understood the new agreements would have saved Arrium about $18 million per year.

The pay impasse comes as investment banker Morgan Stanley holds talks with potential bidders for the company in Japan and South Korea.

The current EBAs are due to expire at the end of next week, leaving potential buyers with no certainty on future pay deals.

Lead administrator Mark Mentha admitted the lack of certainty would make it difficult to find a buyer for the company.

“Without doubt, the opportunity to have an enterprise agreement that goes for four years provides a really stable investment backdrop for a bidder,” he told ABC Radio.

“We need to reflect on the communication of that message to the employees over the last couple of weeks.”

Mr Mentha said the administrators would consider seeking a fresh vote after the proposed steelworks pay deal fell just 25 votes short of passing.

He said there was a need to engage a large number of employees who had declined to vote but said the administrators had ruled out accepting a softer pay cut.

“We’re not looking to renegotiate any of the terms of what’s already been a very lengthy process,” he said.

KordaMentha initially proposed a 15 per cent pay cut for workers which they later reduced to 12 per cent and then 10 per cent.

The Australian Workers’ Union countered by offering a 7.5 per cent cut.

KordaMentha have identified a total of $300 million in savings designed to make Arrium more attractive to potential buyers but it’s understood additional government assistance is needed to attract a buyer.

The federal government has offered Arrium a $49 million loan for new machinery to produce a higher grade iron ore from two of its mines and the SA government is kicking in another $50 million.

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