Arrium (www.arrium.com), one of two surviving Australian steel makers which was forced into administration in April, is looking for further bail-out funds from the Government and says that it should intensify the search for a buyer.

Earlier this month, Morgan Stanley shared an Information Memorandum on the company with global steel makers — including South Korea’s Posco and Japan’s Nippon Steel — and private-equity groups to try and attract bids for the Australian firm, which collapsed owing 4 billion Australian dollars to its creditors.

Arrium’s administrator — Mark Mentha, a partner at Korda Mentha — has told The Financial Times that more public money and tougher anti-dumping rules are needed to save its loss-making Whyalla Steelworks in South Australia. He said: “I have 50 million Australian dollars from the federal government, but that is just a loan. I don’t need loans, and I don’t need debt. I need grants, or I need loans that convert into grants.”

Mr Mentha is seeking 150 million Australian dollars in support from the federal and state governments, along with a similar sum from a successful bidder to invest in new equipment. The firm recently agreed a 10% salary reduction with the trade unions, subject to voted by the workforce.

In addition, it has negotiated cost savings from contractors and suppliers that will cut annual running costs by up to 300 million Australian dollars by the end of 2017 “to move Arrium towards cash break-even”.

He added: “We hope this sends a loud message to bidders — but also to the federal and state governments — that employees, contractors and the banks, which won’t get back 100 cents in the dollar, are making a significant contribution to the future of Whyalla.”

The steel works in Whyalla, a town of 24,000 people in South Australia’s ‘iron triangle’ industrial heartland, is the last domestic producer of long structural steel products such as steel beams and rail tracks. Parts of Arrium’s business are profitable, including its Molycorp metal-grinding division, which is likely to be sold separately (for up to $1.5 billion Australian dollars) under a parallel process run by Deutsche Bank.

However, rescuing the steelworks is a seen as a challenge, as well as a sensitive political issue in Australia, where the Liberal-National coalition government has opposed bailing out industries in difficulties.