E&OE…

ROWAN RAMSEY:

Well I‘ll start off so thanks for all being here, we don’t normally have quite this big a crowd in Whyalla but I’m very pleased to welcome the Prime Minister here today and I’ve been at him for quite some time to say look this is a very important issue the steel industry not just to Whyalla but to Australia and we’ve just been out and had a look around the plant and then a very good conversation with the head of RM Andrew Roberts, we’ve also got John Fullerton here from the ARTC. The Prime Minister I think might have something interesting to announce in a moment. From the people of Whyalla, I must just say to the PM, thanks for being here. I think it's really important we send a message to this city that it is important, it is in the national focus and we are going to find a way forward for this city to thrive and our steel making background is what we want to continue to do here in Whyalla.

On a bit of a frivolous note, I might say that the PM has a good encouraging effect on all things and the price of iron ore of course has gone up by 20% the last couple of days. Prime Minister that is an immediate effect. Obviously that's a joke and this is a serious matter but it is the kind of thing though that we know markets could turn around quickly and we need to be in a position here in Whyalla to make sure that we can take advantage of it. I'm going to hand over to the Prime Minister now and thank you so much for being here.

PRIME MINISTER:

Well thank you very much Rowan, it is great to be in Whyalla and it's good to be here with John, the chief executive of the ARTC, Australian Rail Track Corporation. Can I say we've had a very constructive, insightful discussion with Arrium management, the steelmaker, the chief executive and we've learnt a lot about the situation of the plant, the market, its prospects and I want to announce today that the ARTC is going to bring forward a very important investment in upgrading its rail lines between Adelaide and Tarcoola. This will involve about 600 kilometres, that's 1200 kilometres of rail obviously of new rail being supplied. We'll be upgrading 47 kilogram a metre rail which is 50-60 years old with new 60 kilogram a metre rail, which will be able to carry significantly heavier axel weight, so this will considerably improve the productivity of this vitally important national infrastructure.

Now this upgrade is scheduled, it's planned and what John is doing with the support of the Government of course, is bringing that forward by some years and that will provide substantial additional orders, which based on experience will be fulfilled by Arrium, which of course is the only maker of rail lines for ARTC historically and so it has been a very strong relationship and you will have, or we have seen in any event, some of those rail lines out in the yards there that have been made here at Whyalla. So this is an important investment in productivity. It's an important investment in infrastructure and of course it will provide considerable support to Arrium here and the workers here in Whyalla. So John do you want to say a little more about that?

JOHN FULLERTON:

Thank you Prime Minister. Yes, this is an opportunity to upgrade the network from Adelaide to Tarcoola. It's a very important corridor for us of course. It services Western Australia and also is an important mining precinct. So we're bringing forward plans to replace old rail and also to upgrade the track so that we can carry heavier axle loads from what is a very important mining precinct in South Australia.

PRIME MINISTER:

And there you go, on cue, there's a train! Well done.

Well thank you, thanks John that's good. Now are there any questions?

JOURNALIST:

Prime Minister, the discussions you had with Andrew Roberts and others at Arrium today, what did they specifically ask for? This is separate to your announcement. What do they need to save this plant and what are you prepared to give them?

PRIME MINISTER:

Well, what we're doing here is bringing forward investment which was scheduled and has to be done, bringing it forward by a number of years. Which of course will bring forward the orders for Arrium. It will also bring forward the productivity benefits.

The Gawler Craton mineral district is a very important one. You know the reality is that our future prosperity, our 21st century economy depends on many things.

It depends on innovation, it depends on competitiveness and productivity and it depends on investing in infrastructure. So we've got the capacity to take advantage of these big opportunities.

So this is investment that has to be done and what ARTC is doing is by bringing it forward, it's also providing an additional demand which Arrium is obviously perfectly situated to meet.

JOURNALIST:

But that won’t get them out of the hole overall will it? What else do they want? That's a good stop gap measure, but that's about it. Once that’s over…

PRIME MINISTER:

You should talk to Arrium about that. This is a very significant and very welcome additional opportunity for the plant.

JOURNALIST:

Did they seek any other assistance package though from the Federal Government?

PRIME MINISTER:

There has been no - they have not sought any assistance package from the Federal Government at all and the discussions we've had today have been, have related entirely to the ARTC which is one of Arrium's biggest customers and of course Arrium is a big customer of ARTC naturally too.

So it's a very close relationship and this announcement is a very significant one and it will provide a great deal of certainty going forward for Arrium.

JOURNALIST:

Has the company given you any assurances that it will continue its operations after June in South Australia and this steelworks will remain open?

PRIME MINISTER:

Every indication I have from the management is one of great confidence in the future.

Obviously steel prices are low but as Rowan said those things change. But I think this is a time for a clear-eyed, practical, optimistic approach and what we're doing here is bringing forward a significant order, a very, very significant order and doing so in a way that will improve the productivity of ARTC's infrastructure, upon which depends the productivity of all of its customers.

JOURNALIST:

How much is the order worth?

PRIME MINISTER:

I won't comment on that, well John may choose to, but I think he’s, probably that would be commercial, perhaps you could make some inquiries, I think that would be commercial in confidence.

JOHN FULLERTON:

Yes

JOURNALIST:

Is it a significant investment? Or is it just, you know, pretty…

PRIME MINISTER:

It's a lot of steel, believe me.

JOURNALIST:

Prime Minister just as a story within a story, there is a business here, an engineering company which you may or may not be aware of, that has gone into voluntary administration.

According to its, the administrators, part of the problem is that Arrium doesn't pay its bills in a timely manner. Would you say a company like that is, has an obligation to pay bills on time and keep local companies afloat?

PRIME MINISTER:

I can’t, I'm not going to buy into a, I’m not going to comment on a company that you don’t name and circumstances I’m not aware of.

JOURNALIST:

[inaudible] Engineering.

PRIME MINISTER:

Well look really this is a matter to take up with the company or with Arrium, it's not something for the Government to be commenting on.

JOURNALIST:

Prime Minister did the management ask for tightening in anti-dumping regulations?

PRIME MINISTER:

Well as you know Christopher Pyne has already announced measures in that regard. We're taking dumping very seriously and our anti-dumping measures are strong and getting stronger.

JOURNALIST:

So is your view the survival or otherwise of the steelworks should be left just purely to market forces?

PRIME MINISTER:

My view is that the order that is being foreshadowed here today, the opportunity to supply the rails, the steel rails for this upgrade of the ARTC network is a very, very significant order, very significant opportunity, potential order of course and it will, this is work, this is an opportunity that will become available very soon, within months.

What this company needs is stronger steel prices and more customers. More demand. That's what it needs, that’s what it needs and that is what we are providing here.

JOURNALIST:

You said the investment's coming through in the next couple of months, does that mean that this investment or the money will start rolling before the middle of the year, which there has been speculation, is the deadline to decide whether the plant stays or goes?

PRIME MINISTER:

Well John’s what is the, what is your timetable? John's the CEO, so how would you see this progressing?

JOHN FULLERTON:

Once we get the go-ahead, we can mobilise our team to install the rail within 3 to 6 months, so you know we can begin to take delivery of rail within that timeframe and the installation period will be something like 2 to 3 years.

ROWAN RAMSAY:

I just wanted to pick up one of the points that Mike touched on then, he said you know what is this going to mean for Arrium? One of the issues we've had with the flood of imports and we've done an enormous amount on anti-dumping and I led an inquiry on circumvention of anti-dumping last year, we had the Antidumping Commissioner here, 70 per cent of Arrium's products are already covered by anti-dumping rulings.

But one of the things that has happened is the steel market has shrunk, it has decreased the efficiency of the plant. They have a high level of fixed cost out of this plant, it's the nature of the plant. If they can run closer to 85 or 90 per cent production, that increases their profit, that increases the margin. Because it doesn't cost them much more to do that.

So if they get a significant order, they're already doing 50,000 tonne of rail a year, if they can get another 50 on top of that for a couple of years, this is the time of 2 to 3 years that's the period we're talking, we're talking about a marked increase in their efficiency, their ability to be able to deliver profits back to Arrium and meet those bottom lines.

So people shouldn't undersell the value of this investment by the Commonwealth by bringing it forward and the spin-offs that will have for the developing of the Gawler Craton. We're looking at Carrapateena coming online, more ore bodies being opened up in the Woomera area and the ability to get more ore on the trains coming south decreases the costs. It's a win-win all the way round and I'm really happy to hear the news.

JOURNALIST:

Can you say that the Budget will be on May 10?

PRIME MINISTER:

The Budget is scheduled to be on the 10th of May and can I just say I've addressed this speculation earlier in the day and I thank you for your interest but I just want you to know that however fascinating it may be, my concern and Rowan's concern is on ensuring that Australia makes, continues to make a successful transition to the 21st century economy. The one that where we can take advantage of these huge opportunities that are available to us now with a much more diverse economy than one that was simply dominated by the mining construction boom.

Now that requires every lever of the Government to be pulling in the direction of growth and jobs and one of those levers is investment in infrastructure. So you see the better John's rail infrastructure is, the more that can be carried on the wagons rolling on those rails, the more productive the mines that Rowan is talking about in the Gawler Craton will be, the more efficient his, John's operation will be, the less maintenance will be required. The rails he is going to replace are between 50 and 60 years old. You know this is old infrastructure that has had its day. So this is a very important investment in productivity and it has the considerable advantage as Rowan described of providing additional substantial orders to a business that has very high fixed costs. So the cost per tonne of making additional tonnes of fulfilling an additional order is much lower, so the profit, the contribution to the bottom line and the security of the operation is much greater and on that note thank you all very much.