THE Whyalla steelworks must find a way to cut $60 million a year out of the business or the plant will have to be closed until the market improves, owner Arrium says.

Planning for putting the plant into “care and maintenance” was in progress, Arrium said.

It was “working very hard” with its employees, unions, the State Government, local authorities and the steel industry to safeguard Whyalla, managing director Andrew Roberts said.

Arrium has previously cut 300 jobs across its businesses and taken out $100 million in costs but the continued decline in market prices has forced Arrium to cut deeper.

The mining division, also based in Whyalla, also faces being put into “care and maintenance” if it cannot find ways to reduce its costs in producing iron ore.

The Whyalla steelworks now employs about 1100 people.

Mr Roberts said planning for a possible closure would take until midyear.

Premier Jay Weatherill said there was a “real risk” to the workforce at Whyalla.

The government is in “deep discussions” with the company about support and is negotiating with the Federal Government, he said.

media_camera Arrium steelworks at Whyalla. Picture: Calum Robertson

He declines to say at this stage what support may be offered or to set a timetable but said the government wanted to secure the long-term future of the industry in Whyalla.

Local MP Eddie Hughes, a former Arrium worker, last week said that the Government’s “serious intent” to support regional employment hubs was evident in it underwriting the redevelopment of the Port Pirie smelter.

“We did not walk away from the Port Pirie community and we will not walk away from the Whyalla community — if we need to commit substantial resources, we will,” he said.

Immediately following Arrium’s announcement this morning, acting Whyalla mayor Tom Antonio convened an urgent meeting of key stakeholders, including senior council staff and local federal member Rowan Ramsey.

“We will make a full statement once we’ve got our head around Arrium’s announcement — it’s pretty disturbing,” Mr Antonio said.

Mr Antonio has described the mood of the region as “morbid”.

​While yet to address local members, CFMEU state secretary Aaron Cartledge said the “serious trouble” surrounding Arrium has been “brewing for some time”.

The combination of the Whyalla steelworks and mining business represented a $230 million cash flow out of Arrium.

For the first half year to December, Arrium reported a net loss of $236 million, with Whyalla dragging down the group result.

The steelworks made an operating loss of $43 million.