Cash-strapped Australian miner and steelmaking giant Arrium was on Thursday placed into voluntary administration with big debts on the back of plunging commodity prices.

The company owes more than Aus$2.0 billion (US$1.5 billion) and its shares were suspended on Wednesday after its lenders rejected a proposed US$927 million recapitalisation plan by GSO Capital Partners that would have involved bankers taking a haircut on their debts.

With no other alternatives looming, Arrium said "it has become clear to the board of Arrium that it has, unfortunately, been left with no option other than to place the relevant companies into voluntary administration".

Arrium operates in 15 countries with 8,350 employees, of which 7,000 are based in Australia, according to latest annual report.

Formerly known as OneSteel when it was spun-off from BHP Billiton in 2000, it has been hammered by a plunge in iron ore and steel prices over the past two years amid weak growth in China and delivered a full-year loss of Aus$1.9 billion in 2014/15.

The weak prices have hurt higher-cost producers across the globe, while resource giants such as BHP and Rio Tinto -- which enjoy lower costs -- have added to a supply glut by boosting output.

Administrator Grant Thornton said Australia will assume control of the company and undertake "a comprehensive and thorough review to identify the steps that can and should be taken to stabilise the Australian steel and mining businesses, with a review to restructure".

Industry Minister Christopher Pyne said he was hopeful of a good outcome.

"The federal government is disappointed by today's announcement by the board of Arrium to place the company into voluntary administration, however remains hopeful that a positive outcome can be achieved," he said.