Govt puts Steelworks in administration
UPDATED: The state government has taken control of Whyalla Steelworks, plunging it into administration with special-purpose legislation.
Billionaire Sanjeev Gupta’s sprawling GFG Alliance no longer runs the Whyalla Steelworks after legislation rushed through both houses of Parliament today.
The state government has appointed advisory and investment firm KordaMentha as an administrator of the Steelworks, to stabilise operations and explore a possible sale to a new owner.
Premier Peter Malinauskas said the state government is not contemplating owning the Steelworks.
“For months, my government has been carefully planning a strategy to address the challenges unfolding at the Whyalla steelworks,” Premier Peter Malinauskas said.
“Throughout that period, we gave GFG every opportunity to make good on its promises and to bring creditors back into terms. It has failed to do so.”
Malinauskas addresssing the media today. This picture: David Simmons/InDaily
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The government said workers and contractors will be paid and the administrators will be able to trade on and pay debts incurred during the administration period.
It follows months of uncertainty for workers at the Steelworks and suppliers to the facility which racked up sizeable debts to creditors including the state government which is believed to be owed “tens of millions of dollars”.
“Employees of the Steelworks will now have their futures assured,” Malinauskas said.
“During the administration workers and contractors will continue to do their job and will be paid with the benefit of a government guarantee.”
The premier said he was “relieved” to talk about this publically.
“I stand here now, with hand on heart, being able to tell the people of Whyalla what our plan is,” he said.
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“For the people in Whyalla it means they’re in a far better position now than they were this morning.”
Later today, Malinauskas will travel to Whyalla and it is expected he will make further announcements tomorrow about the Steelworks future.
Significant issues began at the steelworks last year when its blast furnace broke down twice over the course of six months, leading to major delays and losses for the facility’s owner.
Last week, GFG announced it had reached a commercial agreement with Greensill Capital and said it would sell its Tahmoor Coking Coal mine in New South Wales to divert money towards Whyalla.
GFG said the agreement remained subject to a final binding legal agreement and marked “the final chapter of GFG’s debt settlement which has been under negotiation since the collapse of Greensill Capital in March 2021”.
The Whyalla Steelworks operations previously fell into administration in 2016 when its former owner, ASX-listed Arrium, collapsed. Arrium was sold to London-based GFG in 2017 in a deal heralded by former Premier Jay Weatherill as a “victory for South Australia”.
In September, it was revealed that the state government has requested advice as part of “contingency” planning to be ready if the operator calls in administrators.
The news comes after weeks of pressure on the operator of the Whyalla Steelworks from both the local media and the state government.
Revelations that the steelworks owes tens of millions of dollars to the government and businesses were publicised, while the Premier flew to Whyalla to “gather intelligence” from creditors.
State cabinet’s Upper Spencer Gulf subcommittee met in Whyalla on Tuesday and Malinauskas said it was an important opportunity to speak to creditors, the mayor and council team, unions and the chamber of commerce.
Under questioning in a state parliament committee hearing, SA Treasury chief executive Tammie Pribanic revealed GFG owes SA Water about $15 million in unpaid water bills.
Opposition Leader Vincent Tarzia said it was “absolutely outrageous that SA should be paying for $15 million in unpaid water bills of a billionaire” and he called on the premier to guarantee the bill would not be footed by taxpayers.
