A $74 million deal between Adani and a troubled South Australian steelworks will have no influence over whether the Indian conglomerate is awarded a taxpayer-funded loan for a railway, the Federal Government says.

Key points: Arrium will supply steel for the railway linking the mine to Abbot Point if the project goes ahead

Arrium will supply steel for the railway linking the mine to Abbot Point if the project goes ahead Adani is seeking a $900 million government loan for the railway

Adani is seeking a $900 million government loan for the railway Arrium was placed into voluntary administration in April 2016 with debts of more than $4 billion

Adani has confirmed Arrium will supply 54,000 tonnes of steel from its Whyalla steelworks for the 400 kilometre railway linking the Carmichael coal mine to Abbot Point, if the project goes ahead.

The company is seeking a $900 million loan from the Government's Northern Australia Infrastructure Facility (NAIF) for the railway, which is the subject of an independent review.

Adani is still to decide whether to proceed with the mine in the Galilee Basin, but its Australian chief executive, Jeyakumar Janakaraj, said a decision would be made in the next month.

Acting Prime Minister Barnaby Joyce has described the $74 million deal as a saviour for the town of Whyalla, despite no guarantee the miner's Queensland rail line will go ahead.

Arrium was placed into voluntary administration in April 2016 with debts of more than $4 billion. About $2.8 billion of that is owed to Arrium's financiers, which include Australia's four big banks.

Resource Minister Matt Canavan said the announcement was not an attempt to place political pressure on the NAIF, saying the independent review was "a completely separate process".

Jeyakumar Janakaraj says a decision on whether the mine will proceed will be made in the next month. ( ABC News: David Sparkes )

"I want to make it absolutely and abundantly clear; any proposal, any investment from the Northern Australia Infrastructure Facility to any project is a loan, not a subsidy or a grant," he said.

"The NAIF is an independent body and they will work with all proponent on projects and they will work with them on the basis of the mandate we have provided to them."

In a statement, Mr Janakaraj said the contract to purchase the steal had been signed although it was subject to the "normal commercial requirement that the Carmichael mine proceeds".

"This is landmark deal for the Galilee projects," he said.

"Our commitment to the Carmichael projects — and the benefits that will flow to regional Queensland and India — is clearly demonstrated by this deal."

South Australian Treasurer Tom Koutsantonis welcomed the announcement, but cautioned against getting too excited.

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He tweeted that the Arrium steelworks produced 1.2 million tonnes of steel per year, and an extra 50,000 tonnes was not going to save the business.

South Australian Chamber of Mines and Energy chief executive Rebecca Knol said the deal was a vital breakthrough for Arrium's administrator Korda Mentha and the city of Whyalla, which is facing massive job losses if the steelworks close.

Environmentalists have been campaigning heavily against what would be Australia's biggest coal mine, and Westpac has ruled out lending money to the project, stating it would only lend to projects involving higher-quality coal.