Early works have begun on Stage 1 of the Magnetite Expansion Project (MEP1) in South Australia’s Middleback Ranges, as the federal and South Australian governments move to secure long-term magnetite supply for the Whyalla Steelworks.

Geotechnical drilling is under way at Iron Duke, about 56 km from Whyalla, as part of the first stage of the expansion. Once delivered, MEP1 is expected to support magnetite production of up to 2.5-million tonnes a year, providing feedstock certainty for the steelworks and extending mine life by more than 20 years.

The project is expected to underpin more than 300 jobs.

The expansion is supported by a A$20-million loan jointly funded by the Australian and South Australian governments, forming part of a previously announced A$275-million package shared equally between the two jurisdictions.

Federal Industry and Innovation Minister Tim Ayres said the funding was catalysing a critical next phase for the region.

“This A$20-million jointly-funded loan is driving early works on a transformative mining project that will secure the future of steelmaking in Whyalla and provide long-term certainty for the region.

“With a world-class magnetite resource and an estimated 21-year mine life, this project underpins more than 300 jobs and supports the move to low-emissions iron and steelmaking in South Australia," said Ayres.

South Australian Premier Peter Malinauskas added that the project would be central to the steelworks’ long-term viability.

“The MEP1 will not just be a major boon for the Upper Spencer Gulf and the South Australian economy, it is the key to the long-term viability of the steelworks.

“MEP1 is focused on securing a reliable, long-term supply of magnetite to underpin future steel-making in Whyalla.

“This initial A$20-million loan, jointly funded by the commonwealth and South Australian governments from the $275-million funding package announced last July, has allowed administrators KordaMentha to invest in the critical long-lead equipment required to support the mine expansion," he said.

Malinauskas pointed out that MEP1 would provide an additional two decades of mine life and underpin hundreds of new jobs. "We are already seeing some of those come on line, with 27 new apprentices starting work across the steelworks and mine.

“Our commitment to creating skilled jobs is underpinned by an almost A$1-million investment in TAFE SA Whyalla, jointly funded with OneSteel’s administrators.

“It’s been one year since we took the bold decision to put the steelworks and mine operations into administration, and joined the Albanese government in funding the biggest transition and support package of its kind in our nation’s history.

“Today, as a result, the future of Australian steelmaking capacity is on firm footing, with five major players shortlisted to purchase the operations and the magnetite expansion project set to breathe new economic life into the region, and the state," said Malinauskas.

The steelworks’ sale process has entered its final stage, with five domestic and international industrial groups shortlisted from more than 70 initial expressions of interest. More than ten international delegations – including from Japan, Korea, India, Vietnam and Europe – have undertaken site visits, with binding bids expected in the coming months.

The state government placed owner GFG Alliance into administration one year ago, triggering a joint A$2.4-billion support package from the Albanese and Malinauskas governments aimed at stabilising operations, supporting suppliers and restoring investor confidence.

Since then, the Whyalla Steelworks has reported its best open pour billet casting performance since commissioning in 1999, record short-term dispatch results in November and its highest 24-hour production result for a specific casting type since the caster was constructed.