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ABC News
3 days ago
- Business
- ABC News
Whyalla steelworks costing less than anticipated to run, but extra $275m still needed
The South Australian government says it will not have to spend as much money as it initially planned to keep the Whyalla steelworks operating through administration, with a $384 million contingency fund revised down to $275 million. As part of an initial $2.4 billion Whyalla rescue package announced in February, the state and federal governments set aside $384 million — split 50/50 — to cover the costs of running the steelworks while they were prepared for sale. But that initial funding was quickly expanded due to the poor condition of the facility, with steelworks administrators KordaMentha flagging earlier this year that it would run out of money by August. Today, the state and federal governments announced they would allocate a further $275 million — also split 50/50 — to keep the steelworks running. This second tranche of funding was initially budgeted at $384 million. But the state government said it was able to revise this down to $275 million because the steelworks were becoming cheaper to run. "The reason for that is that the business is progressively getting back onto a better footing," Premier Peter Malinauskas said on Wednesday. The Malinauskas government tipped the Whyalla steelworks into administration on February 19, stripping ownership of the asset from British industrialist Sanjeev Gupta's GFG Alliance over concerns about underinvestment and a lack of maintenance. The $275 million announced today brings the total amount of public money allocated to keeping the steelworks running to $659 million. Mr Malinauskas said he remained confident the administration would take 18 months, meaning the steelworks would be under new ownership in the second half of 2026. But he did not guarantee that more money would not be needed to keep the steelworks operating. "While it is true that we're a lot more confident about Whyalla's future today than what we were even after the intervention we made, it's also true though that there's a lot more work to be done and there are no guarantees throughout this process," he said. "We budget for what we forecast to be expected, to do better than that is always welcome, but we're not naive to the fact that this still has a long way to go." The extra funding has prompted fresh scrutiny on how long the steelworks administration will take and what the final public cost will be. Daniel Rossetto, from the University of Adelaide's Institute for Sustainability, Energy and Resources, said it was important the public was given an understanding as to "what is the limit of this type of subsidy". Dr Rossetto suggested the Whyalla intervention could also set a precedent, particularly amid the ongoing challenges associated with the smelting industry in Port Pirie and Hobart. "If you're a community, a vulnerable community somewhere else in Australia, and you look at this and say, 'what's so special about Whyalla, why can't our community receive that sort of money as well?'" he said. "So, then you start to raise expectations in the community about the government's appetite to basically subsidise communities that are involved in industries that are in decline. "For the general public … they should certainly be asking questions about what is the value for money of putting this type of hundreds of millions of dollars into this project when there must be 50 or 100 other competing projects around the country who may also feel like they're in need of some funding too." Opposition spokesperson for government accountability Ben Hood said the Liberal Party supported the state and federal government's $2.4 billion sovereign steelmaking package. But he added that "South Australian taxpayer money cannot be used as a blank cheque". "How much more money does the Premier have to utilise from South Australian taxpayers?" he asked. "He needs to explain how long this is going to take and how much it's going to cost until they find a buyer." The Premier said the state government was "absolutely" justified in allocating nearly $660 million to keep the steelworks afloat. "What you have to contemplate is the counterfactual," he said. "Because everything we have learned through the administration process since the intervention is this business wasn't just potentially going to die, it was in the process of dying if not dead already. "That would mean the total collapse of … long-form steelmaking in this country, it would mean the end of Whyalla, it would mean the end of being able to produce rail and structural steel for ourselves. "That would be a pretty dark day not just for Whyalla and our state but for the nation, and the costs associated with that make this investment look very small indeed." KordaMentha formally opened the sales process for the Whyalla steelworks on June 24. At the time the state government said there were "at least 33" potential buyers for the steelworks, with 60 per cent of those coming from overseas. Mr Malinauskas said the number of interested buyers would "start to whittle away" when the formal expression of interest process closed on August 1. "We don't want someone to take this over who can afford to buy it and then do nothing with it," he said. "We need someone who can afford to take over the steelworks and then dramatically invest in." KordaMentha has been using part of the $384 million in administration funding to do maintenance work to bring the steelworks back into a state suitable for sale. After being installed administrators in February, the firm said it was "shocked" by the lack of maintenance at the facility, describing it as being in a "state of disrepair". It also revealed OneSteel Manufacturing, the GFG Alliance subsidiary that was running the steelworks, was losing $1.5 million a day before going into administration.
ABC News
30-06-2025
- Business
- ABC News
Liberty Bell Bay among Sanjeev Gupta's GFG Alliance companies sued by ASIC
The corporate regulator has taken court action against three companies owned by the financially troubled GFG Alliance for failing to lodge annual reports. The Australian Securities and Investments Commission (ASIC) said on Friday it was pursuing Liberty Primary Metals Australia, Liberty Bell Bay and Tahmoor Coal in the Supreme Court of New South Wales. Liberty Primary Metals was the parent company of the Whyalla Steelworks until February, when the South Australian government forced it into administration for failing to pay tens of millions of dollars in royalty payments to the government, and millions in unpaid bills to creditors. Tahmoor Coal is a coal mining operation in New South Wales which has been shut down since February after failing to pay its suppliers. Liberty Bell Bay is a manganese smelter in Tasmania's north which announced last month it would enter a period of limited operations due to ore supply issues and the pressure that was placing on inventory and working capital. The company has since said it has taken steps to secure a shipment of ore from its supplier. ASIC said Liberty Primary Metals Australia and Tahmoor Coal failed to lodge annual reports for the 2024 financial year. Meanwhile, ASIC said Liberty Bell Bay had failed to lodge any financial reports with ASIC since 2021. ASIC is seeking a court order to direct the companies to lodge the outstanding reports. The federal and Tasmanian governments and Tasmania's Labor opposition have repeatedly called for transparency from Liberty Bell Bay about the state of its finances. "The Australian government — and the Tasmanian government, local staff, unions and affected communities — need much more transparency about the state of the business and the decision to halt operations," Industry Minister Tim Ayres said in May. GFG Alliance is owned by British industrialist Sanjeev Gupta. The company has been contacted for comment.
TimesLIVE
24-06-2025
- Business
- TimesLIVE
Australia begins formal sale process for Gupta's Whyalla Steelworks
'Selected prospective buyers have been granted access to a secure data room, enabling initial due diligence and allowing parties to prepare non-binding indicative offers,' said federal industry minister Tim Ayres. 'A range of prospective buyers have expressed interest in acquiring and transforming the integrated operations.' The independent sale process will be led by administrator KordaMentha and sale advisers 333 Capital, Ayres said. Gupta's family conglomerate, GFG Alliance, did not immediately respond to a request seeking comment. In March, GFG said it remained the largest creditor in Whyalla Steelworks at A$536m (R6.1bn). The privately held conglomerate has been refinancing its global businesses in steel, aluminium and energy since its backer, supply chain finance firm Greensill, filed for insolvency in March 2021. Another subsidiary, Liberty Steel East Europe, was put into administration late last year.
ABC News
24-06-2025
- Business
- ABC News
More than 30 potential buyers for the Whyalla steelworks, SA Premier says
There are "at least 33 interested parties" to acquire the Whyalla steelworks, with a majority of them based overseas, SA Premier Peter Malinauskas says. Four months after tipping the steelworks into administration and removing GFG Alliance as its owners, the state government on Tuesday announced that a secure data room has been set up for prospective buyers to conduct due diligence on purchasing the steelworks and its associated mines. Steelworks administrators KordaMentha has previously said that there were up to 12 "interested parties" in the steelworks, but the Premier today revised that number up to "at least 33". Mr Malinauskas said more than 60 per cent of the prospective buyers were from overseas, including "very significant global steelmakers with names that are synonymous with serious investment in the industry". "If you had said to me back in February — when we made that major intervention to remove GFG and put the steelworks on the path to new ownership — that we'd be in the position that we are in now, I would have taken it in a second," he said. "We, of course, have got a long way to go before we are able to sell the steelworks to new ownership and set it up for the future. Mr Malinauskas did not name the global companies involved, but said the interest parties were from India, Japan and Korea. Australian company BlueScope Steel had also previously been linked to a potential takeover, with KordaMentha tapping the firm as a steelmaking adviser during the administration. South Korean steel giant POSCO has also been mooted as a potential buyer. The amount of interest in the steelworks has not changed the state government's expectations for when the steelworks will be sold, Mr Malinauskas said. The premier said a sale in the second half of 2026 "probably looks about right". It comes as the state government continues to pour money into the facility to keep it operating during administration. June's state budget revealed another $384 million had been set aside for KordaMentha to keep the steelworks running until it found a buyer — on top of an initial $384 million allocated when it took over the steelworks in February. The new $384 million may not be expended in full, and the state government said it expected it to be split 50-50 between the state and federal governments. Mr Malinauskas said the "run rate of expenditure" during the administration was "going down". The federal government is yet to commit to its half of the $384 million in administration funding earmarked for next financial year. Federal Industry Minister Tim Ayres said the federal government was working "carefully" with the state government and would not make announcements about future investments "on the fly". "Of course, you would expect this is public money we're going through a proper due diligence process working carefully with our partners in the South Australian government," Mr Ayres said. "I would be expecting to make announcements about that shortly." Mr Malinauskas also attended a ribbon cutting ceremony on Tuesday to mark the completion of a $32.4 million upgrade of Whyalla Airport. The upgrade — funded with $16.2 million from the federal government, $13.8 million from the state and $2.4 million from the council — will allow QantasLink's 74-seat Q400 aircraft to service Whyalla. The council-owned airport was previously running on a deficit of $800,000 a year. It also suffered a drop in passenger numbers and the permanent departure of Rex Airlines due to a security screening charge.
Reuters
24-06-2025
- Business
- Reuters
Australia begins formal sale process for Gupta's Whyalla Steelworks
SYDNEY, June 24 (Reuters) - The Australian government on Tuesday formally opened the sale process for commodity tycoon Sanjeev Gupta's Whyalla Steelworks, which it said has attracted strong interest from global steelmakers looking to expand into low-emission manufacturing. The steel plant in the state of South Australia was placed in administration in February, with its operating company owing tens of millions of dollars to creditors, and forced the state and federal government to come up with an A$1.9 billion ($1.23 billion) bailout package. "Selected prospective buyers have now been granted access to a secure data room - enabling initial due diligence and allowing parties to prepare non-binding indicative offers," Federal Industry Minister Tim Ayres said in a statement. "A range of prospective buyers have already expressed interest in acquiring and transforming the integrated operations." The independent sale process will be led by administrator KordaMentha and sale advisors 333 Capital, Ayres said. Gupta's family conglomerate, GFG Alliance, did not immediately respond to a request seeking comment. In March, GFG said it remained the largest creditor in Whyalla Steelworks at A$536 million ($347 million). The privately held conglomerate has been refinancing its global businesses in steel, aluminium and energy since its backer, supply chain finance firm Greensill, filed for insolvency in March 2021. Another subsidiary, Liberty Steel East Europe, was put into administration late last year. ($1 = 1.5444 Australian dollars)
