The business has been placed under administration in an attempt to salvage the operations.
The South Australian Labor government has placed OneSteel Manufacturing Pty Ltd, the owner of Whyalla Steelworks, into administration, citing concerns over financial stability.
The state has appointed KordaMentha as administrator under section 436C of the Corporations Act 2001, with the hopes of stabilising operations and finding a potential new owner.
The administrator will investigate all available options to ensure the continued operation of the steelworks while paying all debts incurred during the period of administration.
The move follows months of uncertainty, with Premier Peter Malinauskas stating that GFG Alliance, the parent company of OneSteel, had failed to meet its financial obligations.
“For months, my government has been carefully planning a strategy to address the challenges unfolding at the Whyalla Steelworks,” Malinauskas said.
“We gave GFG every opportunity to make good on its promises. It has failed to do so.”
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Former MP Bill Shorten (L) talking to Liberty OneSteel owner Sanjeev Gupta (R) at the steel works in Whyalla in South Australia, May 1, 2019. AAP Image/Darren England
Urgent Legislation Facilitates Action
The decision to intervene was driven by concerns over GFG’s financial position, including its ability to fund the steelworks’ ongoing operations.
The government received advice warning that a lack of investment could cause the plant’s deterioration, making recovery increasingly difficult.
To facilitate the intervention, Parliament passed amendments to the Whyalla Steel Works Act 1958, allowing the state to enforce GFG’s debts across all of OneSteel’s real property.
The legislative change also introduces new transparency obligations for the steelworks’ owner.
KordaMentha has indicated it will appoint an experienced special adviser to oversee the administration and has begun discussions with potential buyers, including BlueScope.
Future of Australian Steel at Stake: Premier
Government says Whyalla Steelworks plays a critical role in Australia’s infrastructure, producing 75 percent of the nation’s structural steel and is the sole domestic supplier of steel long products.
Whyalla-made steel has been used in several major projects across the country, from Optus Stadium in Perth, to the Western Sydney Airport terminal, and Cross River Rail in Brisbane.
“Without Whyalla steel, Australia would rely on imports at a time when our strategic environment is deteriorating and our housing crisis is deepening,” Malinauskas said.
The state government’s announced comes a week after GFG Alliance Executive Chairman Sanjeev Gupta released a statement disclosing his plans to sell part or all of its stake in the Tahmoor Coking Mine in New South Wales, with some of the proceeds intended for reinvestment in Whyalla.
The premier and mining minister will travel to Whyalla to announce a funding package aimed at ensuring the steelworks’ continued operation.
