What we know so far about the Whyalla Steelworks administration
In a remarkable move, the state government has placed the Whyalla Steelworks owner into administration by passing special-purpose legislation in just 15 minutes. InDaily explains everything we know so far about the developing situation.
It took just minutes for surprise laws to be introduced to Parliament and pass both houses giving the state government the power to place the Whyalla Steelworks into administration.
This deft procedure was necessary to not alarm GFG Alliance owner and billionaire industrialist Sanjeev Gupta to the government’s long-awaited action on the struggling steel plant.
The law changes were “surgical”, Premier Peter Malinauskas said, and offers the workers of the steelworks and the broader Whyalla community “certainty”.
But it’s a move that’s likely without precedent and precedes the announcement of what the Premier has described as “one of the most comprehensive industry support packages that this nation has ever seen”.
This afternoon, the Premier will fly to Whyalla to meet community members. Tomorrow, alongside Prime Minister Anthony Albanese, he will reveal his grand plan to reporters.
In the meantime, here’s what you need to know about the evolving situation:
Who owns the Steelworks?
Not Sanjeev Gupta. He doesn’t even run it anymore.
The government’s unprecedented move saw administrators KordaMentha appointed to run the business.
KordaMentha took over from the Steelworks’ direct owner and GFG Subsidiary OneSteel Manufacturing using Corporations Act mechanisms.
The firm will investigate options including the potential sale of the business, and will ensure the steelworks keep operating.
It’s not KordaMentha’s first rodeo with the steelworks either: the company ran the administration of the business when Arrium collapsed last decade.
This means staff will get paid, contractors will get paid, and debts incurred during the continued operations of the steelworks will be paid.
How did this all happen?
It’s a long story. Here’s a brief timeline.
You might like
July 2017 –
- Whyalla steelmaker Arrium is sold to London-based consortium GFG Alliance, ending 15 months of uncertainty since the town’s main employer fell into voluntary administration.
March 2024 – Blast furnace offline
- The steelworks blast furnace goes offline after it went too cold during a two-day maintenance shutdown.
May 2024 – Repair setbacks
- An uncontrolled iron breakout during repairs that damaged the furnace’s external shell causes “hundreds if not up to a thousand workers” to be placed on a reduced shift schedule without pay.
- 56 jobs are cut from GFG mining contractors.
- The shell is later repaired with hot metal flowing from the smaller capacity emergency taphole.
Jul 2024 – Workers return
- Workers in power and services, maintenance and steelmaking divisions begin “progressively transition to their regular shift rosters”.
- The first steel rolls off the production line as the blast furnace recovery operation is complete.
August 2024 – Contractors owed thousands
- Numerous sources reveal that several contractors who supply services to the steelworks are owed tens of thousands of dollars.
- Some businesses say they may be forced to lay off staff or go into liquidation if the situation does not improve.
- A string of shutdowns starts amid problems sourcing enough coking coal.
September 2024 – Govt seeks advice
- Up to 116 jobs are set to be cut at mining operations connected to GFG as it enters the next planned phase of its hematite iron ore ramp down, shifting its focus to mining magnetite ore.
- Energy and Mining Minister Tom Koutsantonis confirms that the government is taking advice from a procurement activity report that details what to do if the Whyalla Steelworks fell into administration for a second time in a decade.
Nov 2024 – Whyalla City Council fast-track uplifting projects
- Whyalla City Council announced it will fast-track several key projects in the area in an attempt to make up for work lost due to its troubled steelworks.
- The plans include a $1 million investment across Whyalla’s Civic Park and foreshore to create economic, visible, and emotional uplift for the community.
Jan 2025 –
- The blast furnace casts its first steel following the four-month shutdown.
- GFG manufacturing officer Theuns Victor warns the furnace is “running at half its capacity with a number of issues yet to be resolved”.
- Gupta speaks in-depth about the company’s rough 2024, labelling it as “probably the most difficult year… in the steel industry” he’d seen in his 33 years in the business on the in-house podcast “Steel Town”.
Feb 2025 – Government lifts pressure on growing debt
- The South Australian Government calls on GFG Alliance and Gupta to pay up the “tens of millions” of dollars owed to creditors and outstanding royalties.
- GFG’s unpaid water bill of $15 million is revealed in Parliament.
- GFG reach an agreement for settlement of all debts claimed by parties responsible for the main creditors of collapsed financier Greensill Capital.
How did this all happen today?
What a morning.
News broke that special legislation had been introduced, then passed, to place the steelworks into administration at about 11.30am.
The legislation – which the Premier described as “surgical” – was an alteration to the Whyalla Steel Works Act 1958.
The government said the amendment made GFG’s debts to the state government apply as a charge across all, rather than some, of the real property of One Steel, and makes them readily enforceable.
The Premier described it as:
Stay informed, daily
“The purpose of that amendment was discrete. The amendment itself was surgical in nature,” he said.
“The first is to give the state rights to be able to enter the steelworks to perform functions such as basic inspections.
“The second is to get definitively a right to have access to the accounts of the operator of the steelworks.
“And the third is to provide the South Australian government a first charge over debts that are owed to the South Australian government… subsequently, following the passage of that legislation, the South Australian government had the option of putting the operator of the steelworks into administration.”
Why did the government choose to place the company into administration?
Companies go into administration every day in Australia. Usually, this is because the business is no longer able to cover its debts.
The Whyalla Steelworks’ debts, to the state and to sub-contractors and suppliers, have been widely reported in the past few weeks. For instance, it owes SA Water about $15 million and the government generally “tens of millions of dollars”.
Today, the Premier said advice from his Steel Taskforce was that “the owner of the Steelworks’ financial position wasn’t just deteriorating, it was likely to continue deteriorating in the future”.
“More than that, it was compromising the very operations of the steelworks itself,” he said.
“That advice completely accords with all of the information that we are receiving on the ground from people who work within the Steelworks, workers, their representatives, their various unions, but also critically: contractors.
“Given the state of the steelworks was going from bad to worse, and the finances of its owner were compromised, it ran the very real risk that every week and month [that] went by the owner of the steelworks was not able to invest in its operations appropriately.
“It was approaching a point where it would be irredeemable. That is unsatisfactory, that invites government intervention.”
Will the government take over the steelworks?
No.
Well, that’s what the Premier said, for now.
“We aren’t contemplating the South Australian government will be nationalising the entirety of the steelworks,” he said.
How will the government get its money back?
It’s hoping to get its money back through the administration process.
After selling the steelworks, KordaMentha will disburse those funds to creditors equally.
Usually, creditors get less than what they’re owed through this process, but the Premier said the approach was fairer for all.
What does Sanjeev think about all of this?
GFG said it was assessing what the announcement meant and was seeking advice on its options.
“Our concern is first and foremost the wellbeing and safety of our employees,” the company said in a statement on Wednesday.
What happens next?
KordaMentha has seven days to call its first meeting of creditors of the Whyalla Steelworks.
The Premier says KordaMentha is “fully funded”, which is an interesting term that doesn’t usually pop up in administrations. More will be revealed about that tomorrow, he said.
Beyond that, the Premier is set to introduce “one of the most comprehensive industry support packages that this nation has ever seen”.
He refused to enlighten reporters further there, but it might have something to do with about $600 million earmarked for the government’s green hydrogen project which was directly tied to the steelworks’ success. Another $50 million was put aside to potentially bail out GFG, but that was also never spent.
Alongside the Prime Minister, the Premier will reveal his plans for the steel industry’s future.
We’ll have to wait and see what happens.
