JOHANNESBURG (miningweekly.com) – Troubled mining and steel group Arrium Mining and Materials has been promised a A$49.2-million injection, if the Malcolm Turnbull coalition government is re-elected in the July 2 federal election.

The lifeline would allow Arrium to remain competitive and would save about 2 700 jobs at the stricken Whyalla steel operations, in South Australia, Turnbull said at the weekend, announcing the financial assistance programme.

The funds, which would be advanced as a loan, would be used for new machinery at two mines to help Arrium remove waste material from the ore to produce a higher grade ore, benefiting both the mining and steelmaking divisions of Arrium. The company would be able to process low-grade ore stockpiles to export quality and would be able to increase the supply of lump ore feed to the Whyalla steelworks.

The new beneficiation equipment could be in operation by February next year and was expected to add about A$241-million to Arrium’s cash flow over the next five years.

"I have discussed this project with the administrator Mark Mentha and our own adviser Russell Caplan. It is a practical ‘no regrets’ investment, which will lower the cash cost of iron-ore production in the near term and supports both mining and steelmaking and the jobs which depend on them. The commonwealth’s investment is protected by taking security over the assets," said Turnbull.

The Labor government of South Australia last week committed A$50-million in support to the new owner of the stricken Whyalla steelworks, which would allow the buyer of the plant to invest in upgrades at the steel operations.

Arrium entered into business administration earlier this year after a $927-million recapitalisation plan was rejected.

Administrator KordaMentha is now mulling over the future of Arrium’s mines and businesses and said last month that the recapitalisation and sale of the group would be largely completed by the end of the year.

The group's most profitable business was its mining supplies unit, Moly-Cop, which would be sold.