The Malinauskas Labor Government has taken strong and immediate action to secure the long-term future of the Whyalla Steelworks and associated mines by placing the business's owner into administration.
GFG is no longer running the steelworks.
The State has appointed KordaMentha as an administrator of OneSteel Manufacturing Pty Ltd under section 436C of the Corporations Act 2001.
OneSteel is part of the GFG corporate group and is the legal entity that owns and operates the Whyalla steelworks and associated mines.
During this period of administration, the administrator investigates options including sale of the business, with the ambition of delivering the best outcome for creditors and continued operation of the steelworks.
The administrators will be able to trade on and pay all debts incurred during the period of administration.
This means going forward, workers and contractors will be paid.
KordaMentha has advised the State Government it intends to appoint an experienced special adviser to assist the administration and is engaging with parties including BlueScope.
The State Government took the decision to place OneSteel in administration, after losing confidence in the financial capability of GFG to pay its bills as and when they fall due.
The Government has equally lost confidence in GFG's ability to secure funding needed for the ongoing operation of the steelworks.
The Government has received expert advice from its Steel Taskforce that a continuation of the status quo and a lack of investment risks the Steelworks deteriorating to the point where creditors will be impacted even further and where it will be difficult, if not impossible to turn the operation around.
In light of this advice, the State Government has acted decisively and expeditiously.
The appointment of the administrator was facilitated by an urgent and minor change to the Whyalla Steel Works Act 1958 which passed State Parliament this morning.
This amendment makes GFG's existing debts to the State Government apply as a charge across all, rather than some, of the real property of OneSteel, and makes them readily enforceable.
The legislation, which is specific to the Whyalla Steelworks, also imposes new transparency obligations on its owner.
The Premier and Minister for Energy and Mining will travel to Whyalla today and will tomorrow outline elements of a significant funding package to help ensure the current operation of the steelworks throughout the period of administration.
Early and proactive steps will be taken by the State Government and administrator to stabilise operations and explore a possible sale to a new owner in a way that keeps the assets together and the steelworks operational.
Whyalla is critical to sovereign Australian steel. It's one of only two Australian steelworks, produces 75% of Australian structural steel and it's the only domestic producer of steel long products.
Steel from Whyalla is how Australia can build and maintain its infrastructure – whether it's railways, high-rise towers, housing, windfarms, transmission, bridges, defence assets or hospitals.
Whyalla steel is present in big infrastructure projects, from Optus Stadium in Perth to the Western Sydney Airport terminal and rail link, to the Cross River Rail project in Brisbane.
Without Whyalla steel, Australia would rely on steel from overseas amid a deteriorating strategic environment and a national housing crisis.
As put by Peter Malinauskas
For months, my government has been carefully planning a strategy to address the challenges unfolding at the Whyalla Steelworks.
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.
So today, we have acted.
GFG is no longer running the Whyalla Steelworks and associated mines.
The South Australian Government has intervened. The steelworks is now in the hands of an administrator, who will stabilise operations and explore a possible sale to a new owner.
This is a significant step, and one we do not take lightly.
But it is a necessary one to secure the long-term future of Whyalla.
There is an economic opportunity in the Upper Spencer Gulf that must be realised.
We have received advice that the steelworks is being run into ground to the extent that it may become irredeemable.
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.
Only an intervention of this nature will protect the steelworks and its creditors.
During the administration workers and contractors will continue to do their job and will be paid with the benefit of a government guarantee.
KordaMentha is an experienced administrator with a solid track record of ably operating the Whyalla Steelworks.
Later today, I will be travelling to Whyalla, where I expect to make further announcements about my government's steadfast commitment to support the people of Whyalla and deliver the industrial transformation required to realise the economic opportunity in the Upper Spencer Gulf.
The Parliament was today Team South Australia. I want to thank all Members for getting this done.
As put by Tom Koutsantonis
This is not a situation the State Government has created, but it's one that is incumbent on us to resolve – for the benefit of GFG's many unpaid creditors, for the people of Whyalla and for the state as a whole.
GFG has reaped significant profits from their facilities here – but despite long-made promises, it has failed to invest back into the steelworks.
Since FY2017/18 Mr Gupta's company has seen iron ore sales values totalling $7.825 billion from their South Australian operations, while since FY19/20 total steel sales have amounted to $4.8 billion.
In the same period, we have seen nearly $800 million sent offshore including repayments arising from the Greensill collapse, payments of intercompany loans within the GFG group and funding towards the purchase of the Liberty South Korea business.
This is not a Whyalla problem – it is a GFG problem.
And now GFG finds itself in a position where its creditors are not being paid.
These businesses simply can't wait any longer for Mr Gupta.
