Commonwealth support for troubled steel producer Arrium will be conditional on structural reform, Industry Minister Christopher Pyne says.
Mr Pyne has ruled out giving the company a simple cash injection as cheap imports, low commodity prices and a global steel glut threaten the future of its Whyalla steelworks in South Australia's mid-north.
"We're not in the business of giving taxpayers' money to businesses that are struggling," Mr Pyne told reporters in Adelaide on Friday.
But he confirmed the federal government remained in discussions with the state government about the best way to provide help.
Federal Opposition Leader Bill Shorten has also backed commonwealth investment in Arrium which he said could be directed at vital infrastructure including the wharf and port at Whyalla.
Mr Shorten said Australia's steel industry was "under attack" from cheap overseas steel and has written to Prime Minister Malcolm Turnbull urging the government to use more Australian steel in government projects.
Arrium says it could mothball the Whyalla plant unless it finds $60 million in savings to at least break even.
That would result in the loss of about 1000 jobs and also risk a flow-on to thousands more across the region.
Whyalla has a population of about 22,000 and is heavily reliant on the steel and iron ore industry.
SA Treasurer Tom Koutsantonis says the state government will provide assistance but is investigating the best way to deliver support, preferring to help Arrium become viable over the long term rather than providing a "sugar hit" just to help the company over its current difficulties.
As Arrium's troubles were revealed, the federal government announced an urgent inquiry into alleged dumping of cheap Chinese steel in Australia.
Mr Pyne said Arrium and BlueScope Steel had already made contact to have input into that inquiry.
He said decisions would be made within the next two to three weeks by the anti-dumping commission which could result in duties being applied to allegedly dumped products.
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