Arrium workers in South Australia have been asked to take a 15 per cent pay cut to help save the plant.
The Australian Workers Union has entered discussions with administrators KordaMentha, who are looking to cut labour costs across the Whyalla mining and steelworks operations by up to $30 million.
AWU branch secretary Peter Lamps says workers have been told the proposed pay cut would be permanent, unlike temporary cuts offered prior to Arrium entering administration.
“I would suspect when you start getting closer to that bedrock, negotiations will become a lot more tougher,” Mr Lamps told ABC radio on Monday.
“But quite clearly, the workers do understand the significance of this.”
A spokeswoman for KordaMentha confirmed the administrators were in ongoing negotiations with employees about pay reductions.
“It is understood this will have an impact on each and every employee, their families and the entire Whyalla community,” she told AAP.
“But it is essential and the right thing to do for the long-term success of the One Whyalla business.”
Administrator Mark Mentha has identified a total of $300 million in savings designed to make Arrium more attractive to potential buyers.
The cuts, mainly in reduced supply contracts and savings introduced by previous management, would allow the Whyalla steelworks to break even but it’s understood they are not considered enough to attract a buyer without additional government assistance.
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.’
Prime Minister Malcolm Turnbull has ruled out further funding until the completion of a government-commissioned review of Arrium by expert adviser Russell Caplan.
Arrium was placed in administration in April after negotiations with its lenders failed amid sustained low commodity prices.
The restructuring and sale of the group is expected to be finalised by the end of the year.