The federal and South Australian governments will provide almost $3 million to help boost metal processing at the Whyalla Steelworks.
A new processing facility will be built at a cost of $8 million and provide up to 150 ongoing jobs.
It will boost annual steel processing in Whyalla from about 2000 tonnes to as much as 12,000 tonnes and forms part of the overall modernisation of the operations.
The plant will value add to the raw metal produced to allow local steel to better compete with imported fabricated steel.
Premier Steven Marshall said the new processing facility would help drive economic growth in South Australia.
"Whyalla has a long and proud history of manufacturing in South Australia and this $8 million state-of-the-art steel processing facility will further cement its place on the national and international market," he said.
Australian Associated Press