Mining costs must fall to save jobs: Gray

Australia's mining sector must be prepared to cut its cloth to prevent companies like Arrium from collapsing, Labor resources spokesman Gary Gray says.

Mr Gray's home town of Whyalla is among those facing an uncertain future as Arrium's administrators look to restructure the troubled steel and mining group.

He says it's vital for the resources sector to cut costs after spending in the order of $400 billion - or about $5 million per hour - over the last eight to nine years.

"That kind of investment in one sector of one economy is something that we have never seen anywhere in the world ever," he said on Wednesday.

"In hindsight, we could have made the investments better and more efficient.

"The resources sector got used to spending money and now it has to get used to being deeply thoughtful and frugal."

Speaking on the sidelines of a resources conference in Adelaide, Mr Gray said he had worked at the Whyalla steelworks during summer holidays at high school and university.

Several family members still worked for Arrium in Whyalla, while others had taken redundancy packages.

Mr Gray said Arrium's biggest issue was its debt management but there were improvements that could be made to the Whyalla steelworks.

"I think it's silly to suggest there's anything (ahead) other than a difficult period of transition," he said.

"But there is a possibility of us building something out of Arrium that is better than what we currently have."

Whyalla could emulate nearby Port Pirie, where a century-old lead smelter was transformed into an advanced metal refining facility with help from the state and federal governments.

Arrium's lead administrator, KordaMentha's Mark Mentha, has said many of the Arrium businesses are in good shape but are exposed to challenges at the Whyalla operations.

Arrium cut about 900 jobs at Whyalla last year as it grappled with a plunge in iron ore and steel prices, as well as a glut of cheap imported steel.