The South Australian Government will mandate the use of Australian standard steel in all future government projects in a bid to arrest the flagging fortunes of local steelmaker Arrium.

Last week the company announced 250 job cuts at its Whyalla steelworks and said it needed to find an extra $40 million in cost savings to continue operating.

Arrium blamed a global glut of cheap steel for putting its Whyalla OneSteel operations under pressure.

The local industry has raised concerns about dodgy welding, rust and poorly built steel structures being imported into Australia.

Announcing the new policy on a tour of the Whyalla steelworks, SA Mineral Resources and Energy Minister Tom Koutsantonis said it would give the local steel industry a competitive advantage against lower quality imports.

"The steel industry is at risk because of the import of cheaper products from countries with lower quality standards and labour costs," he said.

"This State Government will not stand back and allow uncompetitive pressures to crush a strategic industry that has provided decades of jobs and prosperity for South Australians.

"From this day forward, every piece of government procurement that we use that involves steel must be of an Australian standard, certified independently by a third party to make sure every single piece of South Australian taxpayers' dollars building any infrastructure, whether it's a school, a bridge, a road a hospital, whatever it is, has the highest quality steel."

Mr Koutsantonis also announced the creation of a Steel Taskforce to be chaired by businessman Bruce Carter.

It will receive $4.3 million funding over the next four years, including $320,000 to establish a third-party audit to ensure State Government projects adhered to the new mandate.

The money will also be spent helping local steel fabricators to meet national compliance requirements.

"Mr Carter and the taskforce will partner with the Office of the Industry Advocate to design initiatives that ensure steelmakers and fabricators can compete fairly for local contracts," Mr Koutsantonis said.

"We have listened to the industry and our hope is that state and federal governments follow South Australia's lead and implement a similar mandate on the use of Australian standard steel."