WEBVTT - Paul Barry on the billionaire who failed Whyalla

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<v Speaker 1>Well, good, yeah, great, all right, let's jump in. So, Paul,

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<v Speaker 1>late last year you went to Wyala in South Australia,

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<v Speaker 1>a place that I believe once held great promise as

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<v Speaker 1>the steel capital of Australia. Can you tell me a

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<v Speaker 1>bit about the town, what it was like when you arrived.

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<v Speaker 2>Well, it's a trick to get there from Sydney, I

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<v Speaker 2>can tell you. It's four hours north of Adelaide, about

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<v Speaker 2>four hundred k's and it's a long, flat road.

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<v Speaker 1>Investigative journalist Paul Barry is probably most recognizable as the

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<v Speaker 1>face and voice of ABC's Media Watch. At least that's

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<v Speaker 1>the reception he got in the Wayala pubs.

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<v Speaker 2>It was extraordinary. Just walk into this bar and they'll go, oh,

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<v Speaker 2>what are you doing here?

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<v Speaker 1>He wasn't just there to drink with the locals. When

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<v Speaker 1>he visited in December last year, the steel works was

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<v Speaker 1>at a standstill. Contractors hadn't been paid and staff were

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<v Speaker 1>facing mass layoffs. Paul was there to find out how

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<v Speaker 1>things got so bad, what.

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<v Speaker 2>Happens to the generations of steel workers and their families,

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<v Speaker 2>who who've worked in the business, and what about all

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<v Speaker 2>the others who rely on the steel works for the jobs.

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<v Speaker 2>People are very worried and justifiably so.

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<v Speaker 1>From Schwartz Media, I'm Ruby Jones. This is seven AM

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<v Speaker 1>Today investigative journalist Paul Barry on the billionaire who brought

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<v Speaker 1>Wayala to the brink and how the town can be saved.

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<v Speaker 1>It's Tuesday, January twenty eighth, So Paul to start with,

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<v Speaker 1>tell me a bit about Wayala and why the steel

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<v Speaker 1>works there are so important.

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<v Speaker 2>So it's a town that has twenty two thousand people.

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<v Speaker 2>It was going to be much bigger. It's kind of

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<v Speaker 2>like Canberra. It's sort of laid out very spaciously, big

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<v Speaker 2>wide boulevards, trees down the middle, sometimes, lots of brick

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<v Speaker 2>built public buildings and a very very friendly town. I

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<v Speaker 2>just got a beautiful welcome when I went there. Wyela

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<v Speaker 2>was started back in the nineteen forties as a shipyard

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<v Speaker 2>and then in the sixties as a steel works by BHP.

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<v Speaker 3>Indus Field Development. Then South Australia takes a big step

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<v Speaker 3>forward with the opening will be huge forty million pounds

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<v Speaker 3>steel works in Wyala.

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<v Speaker 2>It's the only steel works in Australia that makes the

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<v Speaker 2>only primary steel works that makes what's called long steel,

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<v Speaker 2>and that is Girder's rails, the stuff that is used

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<v Speaker 2>in the building industry, and if you didn't make it

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<v Speaker 2>at Whyala, you'd basically have to import it.

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<v Speaker 3>From these automated smelters and rollers will come the vital

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<v Speaker 3>steel to feed the hungry growth of Australia's building, car

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<v Speaker 3>making and engineering industries.

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<v Speaker 2>Also, the steel works is very important to the town.

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<v Speaker 2>Although only about eleven hundred people or one thousand people

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<v Speaker 2>now work there, there's something like four thousand jobs in

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<v Speaker 2>the town estimated to be dependent on it. And that's

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<v Speaker 2>not far off half the workforce in Wyala. So if

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<v Speaker 2>you got rid of the steel works, if it went

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<v Speaker 2>busted and wasn't rescued, Wyler's future would be very much

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<v Speaker 2>in doubt. I don't know what would happen to it.

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<v Speaker 3>And now the country's most important news deal making plan.

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<v Speaker 1>And so what did people who spoke to Inwyela say

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<v Speaker 1>about their jobs to how fearful are they of the

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<v Speaker 1>future of Whyala.

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<v Speaker 2>They're incredibly fearful. Wailer is old. It's like sixty sixty

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<v Speaker 2>years old at least, it's desperately in need of investment,

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<v Speaker 2>desperately in need of maintenance. It went bust back in

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<v Speaker 2>twenty sixteen when Ariam owned it and it was then

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<v Speaker 2>rescued after a year in administration, and the guy who

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<v Speaker 2>bought it, Sanjeev Gupta, was sort of seen as a

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<v Speaker 2>savior and it looked like all the problems were solved.

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<v Speaker 4>Uncertainly in terms of the future of this plant is

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<v Speaker 4>now over. We have a lot of work to do

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<v Speaker 4>together and you know, a great future ahead, but we

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<v Speaker 4>need to work together and make changes because this is

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<v Speaker 4>not currently a sustainable, world class plant. It needs to

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<v Speaker 4>become one. We're close to finish.

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<v Speaker 2>Sanjiv Gupta is a is a British Indian business and

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<v Speaker 2>he started off as a commodities trader and about ten

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<v Speaker 2>years ago he started up buying steelworks around the world.

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<v Speaker 2>All these steel works were losing money. They're all pretty desperate.

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<v Speaker 2>They're all competing or struggling to compete against the Vietnamese

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<v Speaker 2>and the Chinese and the Koreans who turned this stuff

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<v Speaker 2>out in massive quantities much cheaper.

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<v Speaker 4>We were not just another company looking to make a

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<v Speaker 4>quick book out of a distressed opportunity. It's first almost

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<v Speaker 4>a family business and I the guard this as part

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<v Speaker 4>of my family.

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<v Speaker 2>Essentially, what this guy Sanjiv Gupta promised, and whatever was

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<v Speaker 2>it would all be modernized, it would be expanded, they

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<v Speaker 2>would use renewable energy, it would make green steel and

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<v Speaker 2>it would be a magnificent future. It's a wonderful feeling

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<v Speaker 2>for our community.

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<v Speaker 5>Everyone's feeling the sign from business workers, people there in there, retired.

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<v Speaker 2>Everybody's feeling this feeling of relief.

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<v Speaker 5>And the more that we're hearing about mister Gupture hearing

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<v Speaker 5>about liberty, the better we're feeling.

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<v Speaker 1>And so what has happened.

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<v Speaker 2>None of that stuff has happened. There hasn't been any investment.

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<v Speaker 2>The coke ovens have packed up all together. The blast

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<v Speaker 2>furnace has been out of action for half a year.

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<v Speaker 2>It's now back in action again marginally, but people are

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<v Speaker 2>getting more and more worried that it's going to go

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<v Speaker 2>bust quite soon. I talked to a creditor, a guy

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<v Speaker 2>called Jim Watson, who runs an engineering consulting business. He

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<v Speaker 2>relied almost entirely on Wyler for his business, and he

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<v Speaker 2>built it up to a stage where he had seventeen people.

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<v Speaker 2>He persuaded a lot of people to come up, professional

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<v Speaker 2>people to come up from Adelaide with their families, had

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<v Speaker 2>a half a million dollar contract coming into early twenty

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<v Speaker 2>twenty four, all going fine, and suddenly the work drives up.

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<v Speaker 2>There is no work. He has to lay people off.

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<v Speaker 2>They go back to Adelaide. He won't be able to

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<v Speaker 2>get them back. He's now laid more people off. What

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<v Speaker 2>happens to him if the steel works goes down. It's

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<v Speaker 2>not a good outlook.

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<v Speaker 1>And so as people who rely on the steel works

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<v Speaker 1>have been dealing with this, what has said Ajiev Gupta

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<v Speaker 1>been doing.

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<v Speaker 2>In the middle of the crisis last year, when all

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<v Speaker 2>his creditors in Wahalaaras are sort of jumping up and

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<v Speaker 2>down and not being paid, Gupta is in Sydney buying

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<v Speaker 2>a twelve and a half million dollar apartment on the

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<v Speaker 2>waterfront from Broadcast to John Laws. He's at the same time,

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<v Speaker 2>just up the road from there, he's got a thirty

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<v Speaker 2>four million dollar house that he's got plans for renovate

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<v Speaker 2>a cost of at least ten million dollars. And so

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<v Speaker 2>here's a guy who's brought up a whole bunch of

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<v Speaker 2>ailing steelworks, promising in all of these places that he's

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<v Speaker 2>going to transform them. And in each of these places,

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<v Speaker 2>the story is the same. Basically, the steelworks is now

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<v Speaker 2>on the brink of bankruptcy. Some of them actually have

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<v Speaker 2>gone bankrupt. He's being chased by people who are trying

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<v Speaker 2>to wind up all these companies. Wallas Steelworks has been

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<v Speaker 2>rocked by revelations. Owner Sanjeev Gupta's overseas officers have been

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<v Speaker 2>searched by serious fraud investigators.

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<v Speaker 5>Police wanting more information in their investigations. After the Serious

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<v Speaker 5>fraud Officers in the UK launched a probe into alleged

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<v Speaker 5>money laundering within GfG Alliance, he reportedly owes almost a

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<v Speaker 5>billion dollars to administrators of his collapsed financier.

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<v Speaker 2>So it's an absolute hot mess. And as the crisis

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<v Speaker 2>is hitting all these poor people who work at the plant,

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<v Speaker 2>or who are contractors to the plant, or have supplied

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<v Speaker 2>stuff to the plant, who aren't getting paid, he is

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<v Speaker 2>out there spending like a drunken sailor. So Wyler is,

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<v Speaker 2>in a way one of the better ones. It's not

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<v Speaker 2>quite so far down the tube as the ones in

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<v Speaker 2>Europe are. But what's happened in Europe gives you a

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<v Speaker 2>very strong clue of what's going to happen here, which

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<v Speaker 2>is that promises aren't kept. He keeps on paying the

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<v Speaker 2>workers for a bit and then eventually it all falls

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<v Speaker 2>apart and it all goes bust.

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<v Speaker 1>After the break, how to bring Wyala back from the brink? Paul,

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<v Speaker 1>I suppose there is a bigger question that goes beyond

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<v Speaker 1>the failures of management, and that is whether or not

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<v Speaker 1>it is actually possible to make the Wyla Steel works viable.

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<v Speaker 1>Will it ever produce steel the way that it used to?

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<v Speaker 2>Absolutely? I mean there is a question about can Australia

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<v Speaker 2>produced steel competitively Koreans, the Chinese and Vietnamese. They invest

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<v Speaker 2>much more money, have invested much more money. They produce

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<v Speaker 2>on a much larger scale. We probably can't compete with them.

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<v Speaker 2>But do you let your steel works go bust and

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<v Speaker 2>take a town down with it with twenty two thousand people?

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<v Speaker 2>What do you do with them in terms of relocating

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<v Speaker 2>them or putting them on the doll or finding jobs

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<v Speaker 2>for them. So it may be that you can't make

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<v Speaker 2>steel as cheaply as some of these competitors, but there's

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<v Speaker 2>a cost in giving it up as well. And unless

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<v Speaker 2>you can find other jobs to go into Waiela, you're

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<v Speaker 2>looking at the town that is doomed. So I think

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<v Speaker 2>there are very strong arguments for trying to say if

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<v Speaker 2>the steel works, and it's not in terms of patching

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<v Speaker 2>up an old one, it is in terms of building

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<v Speaker 2>a new one that is powered by renewable energy.

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<v Speaker 1>And do you think that that is a viable option

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<v Speaker 1>for Wyler green steel?

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<v Speaker 2>Look, I'm no expert, but the experts tell me that

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<v Speaker 2>it is because that's the way that steel around the

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<v Speaker 2>world is moving. All these steel companies are being forced

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<v Speaker 2>basically to cut their emissions, and so you've got governments

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<v Speaker 2>around the world which are stepping in Britain or in

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<v Speaker 2>Europe to fund that transition to green steel. They say

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<v Speaker 2>that Wyler has a lot of natural advantages. It's got

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<v Speaker 2>iron ore called magnetite, which is very very high ferrost

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<v Speaker 2>content in absolute abundance in the hills nearby. So that's

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<v Speaker 2>a very important thing. Magnetite isn't a very common iron ore,

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<v Speaker 2>and it's what you need if you're going to get

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<v Speaker 2>rid of the old traditional coke blast furnaces. You need

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<v Speaker 2>something with a high iron content. So that's one big plus.

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<v Speaker 2>It's got a huge supply of iron ore. It's got

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<v Speaker 2>a railway from where these iron ore mines might be.

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<v Speaker 2>It's got a railway from the steel works to customers,

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<v Speaker 2>it's got a deep water port, it's got massive amount

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<v Speaker 2>of renewable energy because South Australia the wind is blowing

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<v Speaker 2>constantly and the sunshines all the time. And it's also

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<v Speaker 2>got a workforce. It's got a skilled workforce. So yes,

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<v Speaker 2>I think it has a lot of stuff going for it,

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<v Speaker 2>but it does need commitment from the government, which you

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<v Speaker 2>would have to put in some money, and it needs

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<v Speaker 2>commitment from an international steel company which would need to

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<v Speaker 2>go Yeah, we want to be there. We think with

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<v Speaker 2>this can be done. There is evidence that there are

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<v Speaker 2>people out there who are prepared to do that. The

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<v Speaker 2>South Australian government called for expressions of interest in making

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<v Speaker 2>green iron, which is kind of the previous step to

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<v Speaker 2>green steel, and they're fifty nine companies. I think it

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<v Speaker 2>was said, yes, we're interested. And the South Australian government

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<v Speaker 2>is also building a green hydrogen plant which is going

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<v Speaker 2>to happen whatever happens to Wuyala, and that's supposedly going

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<v Speaker 2>to be online in twenty twenty six. So there's a

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<v Speaker 2>whole bunch of reasons why green steel could definitely work

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<v Speaker 2>in Wyala not worth giving up now.

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<v Speaker 1>Right, But it sounds like for any of that to

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<v Speaker 1>happen you would need not only government intervention government funds,

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<v Speaker 1>but you would need Gupta to go so that another

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<v Speaker 1>company could come in.

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<v Speaker 2>Yeah, damn right, there's no way, as they say, there's

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<v Speaker 2>no way this is going to happen unless you get

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<v Speaker 2>the keys to the place. You have to persuade him

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<v Speaker 2>to step aside, and that is unlikely to happen, judging

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<v Speaker 2>by the way he's hung on to all these other

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<v Speaker 2>businesses he has around the world. So it's not an

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<v Speaker 2>easy job to get him out, that's for sure. But

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<v Speaker 2>I think you do need to get him out because

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<v Speaker 2>he ain't got the money to do it.

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<v Speaker 1>Obviously, a federal election is on the cards in the

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<v Speaker 1>next few months. How does that complicate the situation.

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<v Speaker 2>Well, I think it's very hard to see a coalition

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<v Speaker 2>government putting a lot of taxpayer money into green steel.

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<v Speaker 2>I mean it would involve renewable energy and supporting industry,

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<v Speaker 2>neither of which the coalition is very keen on, and

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<v Speaker 2>it's got a policy to rely on nuclear power in

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<v Speaker 2>twenty forty. So the chances of Whyala being rescued and modernized.

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<v Speaker 2>With the Coalition in the driving seat, it seems to

0:11:56.120 --> 0:11:59.840
<v Speaker 2>me a very slim So Labour has a problem, which

0:11:59.880 --> 0:12:02.200
<v Speaker 2>is if this place is to be rescued and to

0:12:02.240 --> 0:12:05.079
<v Speaker 2>be its future to be secured, Labour needs to act.

0:12:05.800 --> 0:12:08.040
<v Speaker 2>That means that it's not just a oh, this is

0:12:08.040 --> 0:12:10.200
<v Speaker 2>an interesting story that's going to bubble along for a bit.

0:12:10.360 --> 0:12:12.280
<v Speaker 2>This is actually a bit of a crisis for Wyler

0:12:12.320 --> 0:12:14.360
<v Speaker 2>because there's only what two or three months until the

0:12:14.400 --> 0:12:18.360
<v Speaker 2>next election. Unless something is done before then, it's really

0:12:18.440 --> 0:12:20.840
<v Speaker 2>hard to see how this future can be secured.

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<v Speaker 1>Paul, thank you so much for your time.

0:12:24.600 --> 0:12:25.200
<v Speaker 2>It's pleasure.

0:12:27.040 --> 0:12:29.600
<v Speaker 1>You can read Paul Barry's reporting from Wyala at the

0:12:29.640 --> 0:12:39.120
<v Speaker 1>monthly dot com dot Au. Also in the news today,

0:12:39.600 --> 0:12:44.200
<v Speaker 1>the Trump administration has launched widespread immigration raids in Chicago.

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<v Speaker 1>The arrests are part of a mass deportation plan targeting

0:12:47.360 --> 0:12:51.640
<v Speaker 1>undocumented immigrants in the United States. Last week, President Trump

0:12:51.679 --> 0:12:55.320
<v Speaker 1>signed a number of executive orders relating to immigration, including

0:12:55.360 --> 0:12:58.480
<v Speaker 1>restricting legal pathways to come to the US and attempting

0:12:58.480 --> 0:13:02.840
<v Speaker 1>to ban birthright citizenship. His administration has also given deportation

0:13:03.000 --> 0:13:07.280
<v Speaker 1>powers to a broad range of law enforcement agencies. And

0:13:07.360 --> 0:13:10.760
<v Speaker 1>Australia's Foreign Minister, Penny Wong has urged unity across the

0:13:10.800 --> 0:13:14.160
<v Speaker 1>political divide in a speech at Auschwitz marking the eightieth

0:13:14.200 --> 0:13:19.040
<v Speaker 1>anniversary of the Concentration Camps liberation. Senator Wong was joined

0:13:19.080 --> 0:13:22.520
<v Speaker 1>in Poland by Attorney General Marc Dreyfuss and Anti Semitism

0:13:22.640 --> 0:13:28.280
<v Speaker 1>Envoy Jillian Siegel to commemorate International Holocaust Remembrance Day. Last week,

0:13:28.360 --> 0:13:30.880
<v Speaker 1>National Cabinet met to discuss the rise in anti Semitic

0:13:30.920 --> 0:13:34.160
<v Speaker 1>attacks in Australia, announcing they would start a register to

0:13:34.200 --> 0:13:38.160
<v Speaker 1>track anti Semitic incidents. The Coalition has criticized the government's

0:13:38.160 --> 0:13:43.240
<v Speaker 1>approaches insufficient. I'm Ruby Jones. This is seven am. See

0:13:43.280 --> 0:13:46.000
<v Speaker 1>tomorrow for an interview with former Australian of the Year

0:13:46.080 --> 0:13:46.640
<v Speaker 1>Grace Tame.