South Australia wants the commonwealth to help upgrade infrastructure linked to Arrium's Whyalla mine and steelworks.
SA Treasurer Tom Koutsantonis says the improvements could make the operations more attractive to prospective buyers as administrators consider Arrium's future.
"If you've got a (state) government and a commonwealth government prepared to invest in upgrades to infrastructure and efficiencies, it makes it a lot more attractive," he told reporters.
"Some of the language you've been hearing from the commonwealth government about not propping up failing businesses doesn't mean they won't invest in innovations. It simply means they won't socialise debt."
Mr Koutsantonis, who met Arrium's administrators on Friday, said he had been assured the company was trading as normal and there were no immediate plans to sell assets.
A potential buyout was "not the final solution" but Mr Koutsantonis said he was encouraged by the interest shown by prospective buyers.
Federal Industry Minister Christopher Pyne, who was to meet the administrators later on Friday, said it was important to find a way forward for Arrium.
"What I'm working towards is what's the next chapter for Arrium going to be, rather than the closing down of the business," Mr Pyne told AAP ahead of the meeting.
"I think we are making real progress and it's important to be positive rather than negative."
He had spoken with state treasurers about what assistance they might provide with a view to helping the company trade out of its difficulties.
Arrium's administrators have said the troubled company has no immediate cash concerns and can continue to trade while a plan to take the company forward is negotiated.
Paul Billingham, from administrators Grant Thornton, said the workers at Arrium's Whyalla operations and across the country were their first concern.
"It's early days but we're very happy with the support we've had from creditors, suppliers and customers," Mr Billingham said.
"Our forecasts show that we've got no particular cash concerns. It really depends on customers continuing to support Arrium, buying the products, that's very important.
The Australian Workers' Union also described Friday's meeting as positive.
But the mood in Whyalla, the area likely to bear the greatest brunt of Arrium's difficulties, was downbeat.
Steelworker Martin Hilton, 58, said he had worked at the steelworks for 36 years and feared for its future.
"At my age, where would I get a job?" he told AAP.
Another employee, Grant Cunningham, who is on leave recovering from an operation, feared there wouldn't be any work for him when he returned.
"I'll probably go back to work and might not have a job. I'm sitting here worrying, contemplating what's going to happen," he said.
Arrium, which has billions of dollars of debt, has up to 7000 employees across the country, including 2800 in NSW and 1600 at Whyalla.
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