When BlueScope chief executive Mark Vassella was asked at its half-year results last week whether Australia’s largest steelmaker might be interested in buying the embattled Whyalla Steel, he had reason to choose his words carefully.

It would not have been a surprise to the BlueScope boss that just 24 hours later, the South Australian government took the extraordinary step of wresting control of the debt-laden Whyalla steelworks from British billionaire Sanjeev Gupta’s GFG Alliance before engineering a $2.4 billion rescue and rejuvenation with the federal government.

The fact that Vassella had been in Adelaide the previous weekend – as the impending financial collapse of Whyalla played out to the backdrop of the drunken antics of the LIV golf tournament – was no accident.

That weekend, South Australian premier Peter Malinauskas reportedly met with Gupta in a last-ditch bid for the billionaire to retain control despite owing the state tens of millions in unpaid bills – including a million-dollar sponsorship debt with the premier’s beloved AFL tea Port Adelaide.

Hours after that meeting, Malinauskas was sitting alongside Vassella at the LIV tournament.

Vassella is described as a golf tragic, but Malinauskas did not invite the BlueScope boss to the tournament to watch beer cups fly through the air and enjoy the party atmosphere.

The premier would have already sealed Whyalla’s fate and KordaMentha would soon get its second stint running the steelworks as administrator, having orchestrated the sale to Gupta in 2017 for $700 million.

BlueScope, which has helped previously with technical/operations support advice on the embattled Whyalla, confirmed it is in talks with KordaMentha about being appointed as an expert steel advisor in administration.

But its interest does not end there. The flood of government funding announced this week – designed to offer the steelmaker the upgrade to financial and environmental sustainability that Gupta long promised but never delivered – will help address the potential stumbling block that will determine BlueScope’s interest, as Vassella told reporters after its interim results last week.

“That’s such a critical asset, and we’ve looked at those assets in the past,” Vassella said.

“I think what our investors say to us is ‘make sure that you get an appropriate return for the amount of money that you’re putting in … show us there’s a return on the investments that you’re potentially going to make’.”

BlueScope is no stranger to how the $1.9 billion earmarked for upgrading Whyalla – including a low carbon emissions electric arc furnace (EAF) – will need to be spent to make the plant sustainable and competitive in a global market.

Morningstar noted that BlueScope’s flagship North Star operation in the US offers industry-leading profit margins thanks to the economic efficiency of its electric arc furnace, which is becoming a feature of the US market, where 65 per cent of steel production is via EAFs.

But BlueScope’s big advantage out of the US was delivered by Donald Trump’s proposed tariffs.

“If prices go up, as we saw last time, then the short answer is, yes, we stand to benefit,” he said, noting that steel prices were up 20 per cent since Trump’s recent tariff announcement.

“Being a domestic manufacturer, we will potentially benefit from any increase in price that occurred because of the tariffs and the impact they have on imported steel coming into the country,” he said.

It’s a big deal for BlueScope, which produces 3 million tonnes of steel in the US that accounts for 70 per cent of its earnings, according to Morningstar’s Esther Holloway.

BlueScope’s manufacturing plant is already operating at capacity, so its tariff upside will be driven purely by the rise in US prices.

“We anticipate US steel tariffs leading to an increased reduction in supply and higher margins, and better near-term pricing for US producers,” she said.

It may explain why BlueScope’s shares have soared last week to their highest since August 2021.

The downside for BlueScope is the China property malaise, which has added to the flood of steel exports and slashed prices globally from their post pandemic record levels in 2022. It may have helped seal Whyalla’s fate, according to Vassella.

“There’s a lot of export steel flooding around, and we’re seeing historically low (profit margin) spreads in Asia because of the amount of export that’s coming out of China. So I will imagine that (Whyalla’s) long products business is suffering from similar challenges,” he said.

But BlueScope also needs help from the Chinese onslaught.

“We need a really strong, diligent, effective, quick-to-act anti dumping regime, or … we’ll see material flow from other parts of the world and come to our country and undermine our domestic manufacturing capacity.”

Back in South Australia, where the administration of Whyalla is unfolding, Malinauskas is already spruiking for potential buyers – and one in particular, the premier stating that he had “reason to believe” BlueScope may be interested.

“They’re monitoring events in Whyalla closely and I look forward to that unfolding,” he said.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.