The South Australian Government has placed the owner and operator of Whyalla steelworks, OneSteel Manufacturing, under administration amid various operational challenges at the site.
The SA Government made the decision after it lost confidence in GFG Alliance’s – OneSteel’s parent company – ability to pay its bills in a timely manner. The Advertiser reported that Whyalla’s debts could be more than $300 million.
“The (SA) Government has equally lost confidence in GFG’s ability to secure funding needed for the ongoing operation of the steelworks,” the SA Government said.
Following minor changes to the Whyalla Steel Works Act (1958) passing State Parliament yesterday, KordaMentha was appointed as Whyalla’s administrator.
Administrators Mark Mentha, Sebastian Hams, Michael Korda and Lara Wiggins will evaluate options for the Whyalla business to deliver the best outcome for creditors and continued operation of the steelworks. Opportunities being investigated include a potential sale.
“As administrators, our job is to examine the financial position of (Whyalla Steelworks and Mining), stabilise the business and maximise the chances of the business continuing in the interests of all stakeholders,” Mentha said.
“With the funding support of the South Australian Government and support from other interested stakeholders, Whyalla Steelworks and Mining will remain in business under our control while we assess the next alternatives and complete our investigations.”
Whyalla is one of two Australian steelworks businesses. It produces 75 per cent of Australian structural steel and is the only domestic producer of steel long products. GFG acquired Whyalla steelworks from Glencore in 2018.
KordaMentha said keeping Whyalla operating amid the administration period is set to preserve around 4000 direct and indirect jobs.
“This may take some time, but all parties are committed to ensuring the business remains operational while we work out a plan for its future, securing new investment and possibly transitioning to new ownership,” Mentha said.
SA Premier Peter Malinauskas said the State Government has been working to address the challenges unfolding at the Whyalla steelworks for months.
“Throughout that period, we gave GFG every opportunity to make good on its promises and to bring creditors back into terms,” Malinauskas said.
“It has failed to do so. So today, we have acted. GFG is no longer running the Whyalla steelworks and associated mines.”
Malinauskas said the decision was not made lightly and was necessary to “secure the long-term future of Whyalla”.
“Importantly, it’s not just the steelworks itself – it’s a vast number of local suppliers, small businesses owned and operated by South Australians, whose debts remain unpaid, whose revenue has evaporated, and whose livelihoods are at stake,” 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.”
Malinauskas is set to announce an industry support package today, designed to support the current Whyalla steelworks operations throughout the administration period.
The administration announcement comes days after GFG chairman and chief executive officer Sanjeev Gupta revealed plans to divest some or all of GFG’s stake in the Tahmoor coal mine in New South Wales to repay creditors and suppliers of Whyalla steelworks.
A GFG spokesperson told the ABC the company is assessing what the Whyalla administration period means and is seeking advice on its options.
“Our concern is first and foremost the wellbeing and safety of our employees,” the spokesperson said.
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