Federal industry minister Christopher Pyne says the management of troubled steelmaker Arrium is to blame for putting thousands of jobs at risk.
Mr Pyne says it's unfair to criticise the company's lenders, including the big four banks, for Arrium's financial woes after it rejected a recapitalisation plan involving private equity group GSO Capital Partners.
"If there is anybody that needs to look at themselves, it's the Arrium management, not the banks," he told reporters in Adelaide on Wednesday.
"Arrium has a $2 billion debt. That is a problem for Arrium, incurred by Arrium management. It is no fault of the workers of Whyalla and it's no fault of the state or Commonwealth governments."
Arrium has suspending trading in its shares on the Australian stock exchange, saying it will update the market on talks with its lenders within a week.
The banks have pushed Arrium to go into voluntary administration, with the administrator to be hand-picked by the lenders, the Australian Financial Review newspaper has reported.
Mr Pyne said that keeping the Whyalla steelworks operating would provide the surest way for the banks to get their money back in such a scenario.
"If (Arrium) goes into administration, obviously the banks will effectively be saying that they're going to be running the company through intermediaries," he told AAP.
"If they do that, that will give Whyalla a chance to help them trade out of their difficulties."
A Senate committee investigating the future of Australia's steel industry has meanwhile been told the industry requires urgent attention.
Addressing the committee in Canberra, Arrium executive Naomi James said it would require a concerted effort from government, workers and contractors to keep the Whyalla steelworks operating.
"In the present circumstances, there is nothing that the company isn't considering in terms of finding a way through," Ms James said.
Business SA chief executive Nigel McBride said he was saddened some of Arrium's mine workers had voted not to take a pay cut to help the embattled company
"I know it's hard to take a cut in pay but it's also harder to find a job in the Upper Spencer Gulf and Whyalla region when that fails," he told AAP.
South Australian treasurer Tom Koutsantonis called for calm, saying there was plenty of time for stakeholders to find a solution.
Senate committee member Sean Edwards said it appeared that while Arrium's fundamental business of mining ore and making steel remained sound, the company had been unable to manage its accrued debt.
"Added to this are difficult trading conditions, challenging commodity prices and the ongoing challenge for Australia to protect against steel dumped on the market with which Arrium has to compete," Senator Edwards said.
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