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ABC News
14-05-2025
- Business
- ABC News
Administrator KordaMentha updates Whyalla Steelworks creditors and workers
An update on the administration of the Whyalla Steelworks in South Australia today has informed workers and creditors that $100 million has been spent by administrator KordaMentha so far. The South Australian government forced the steelworks into administration in February after the business, owned by GFG Alliance, failed to pay tens of millions of dollars in royalty payments to the government and millions in unpaid bills to creditors. KordaMentha partner Sebastian Hams said the $100 million had been spent on restoring inventory, sustaining capital expenditure and improving the site's safety. He said site visits from prospective buyers were underway. As for taking on the debts of Whyalla Ports Pty Ltd, Mr Hams said the administration was over One Steel Manufacturing Pty Ltd only. "[Whyalla Ports] is not in administration, and therefore I should assume that company is solvent and that's going to pay its debts as and when they fall due." Mr Hams said the blast furnace at Whyalla was now operating at its full capacity of 2,800 tonnes a day, "which means it's now running in a stable environment", but its life span was uncertain. "The new buyer will come in with new technology and a different mindset, so it's entirely dependent on what a new buyer wants to do," he said. Mr Hams would not reveal how much the loss in daily profit had been reduced. "The loss pre-appointment was running at about $1.5 billion a day," he said. "It moves on a daily basis, but it's significantly less. "We're really focused on seeking a buyer that is a manufacturer who understands steel … and understands the value in the mines." The state government moved to clarify Whyalla port's ownership by introducing amendments to legislation in parliament on Tuesday. Premier Peter Malinauskas told the parliament that the government would introduce amendments to the Whyalla Steelworks Act to show the port was owned by former steelworks owner OneSteel Manufacturing. One creditor who wished to remain anonymous told the ABC they were owed $100,000 to $200,000 by Whyalla Steelworks, with 10 to 15 per cent of this being from the port alone. They said they feared they may never receive the money owed to them from Whyalla Ports Pty Ltd due to the dispute over its ownership. "I don't think it's going to happen unless we put a letter of demand in to GFG, Sanjeev Gupta and his stakeholders," they said. "We're going through legal advice now." Another creditor who did not want to be identified said they were owed $20,000, outstanding for around seven months past the due date of payment. They said they did not realise Whyalla Ports was a separate company until a few weeks ago. "If we had known that, we probably would have done things a little bit differently in regards to the Whyalla Ports," they said. "A bit disappointing we had to find out the hard way." Steelworks employee Sue Kelly said the safety of the plant had been seriously lacking under GFG Alliance, but it had got "a lot better" since KordaMentha took over. "Even to the degree of our … PPE [personal protective equipment]," Ms Kelly said. Australian Workers Union local branch organiser Shane Karger said it was "fantastic to have the real situation put out to the people". "To develop a relationship that we have now with KordaMentha that is open and honest is definitely something that we would like to maintain going forward with new buyers," he said. "We'd hate to get to a situation where it's all cloak and dagger again, it's all secrets behind closed doors, and eight years down the track we're 'oh no, the steelworks is in trouble again'." GFG Alliance has been contacted for comment.
The Guardian
03-03-2025
- Business
- The Guardian
The ‘scary' state of Whyalla steelworks' bank balance revealed by administrators
The Whyalla steelworks was 'running on empty' and left in a 'dangerous' financial position by its former owner, according to a scathing assessment of the South Australian project by the recently appointed administrators. It was also losing $1.5m a day, running low of critical steelmaking materials and owed creditors more than $1.3bn, those at the first creditors meeting heard on Monday. The steelworks was put into administration last month after the SA government, which is also a creditor, lost confidence in the entity operating the steelworks, headed by the UK billionaire Sanjeev Gupta. Accounts from that entity, OneSteel Manufacturing (OSM), show the company lost $319m in the seven months to the end of January, equating to a pre-tax loss of $1.5m a day. Sebastian Hams, from the administrator KordaMentha, said there was just three days' worth of the crucial steelmaking material, coking coal, at the facility upon his appointment. He said minimal repairs, maintenance and capital works had been done at the steelworks over an extended period. 'The business is running on empty. It is a really dangerous position to get into,' Hams told employees and creditors at the meeting in Whyalla, a port city located north-west of Adelaide. Sign up for Guardian Australia's breaking news email 'We had $8m in the bank – for a business that turns over somewhere around over $1bn, that is just crazy. And the working capital position, by virtue of the creditor arrears, was really quite scary.' Gupta took over the project in 2017 and made promises to invest heavily in what is one of only two major integrated steel projects in Australia and the only local manufacturer of rail. But his leveraged portfolio of global steelmaking assets has been under huge financial stress leading to a series of closures and disruptions at operations across Europe and the US. Problems with Whyalla's blast furnace, which is central to steelmaking, exacerbated the problems at his Australian operations. While Gupta has lost control of the steelworks and accompanying mine, he has retained ownership of the port operations, potentially complicating the administration process. Entities linked to Gupta's GFG Alliance have claimed creditor debts of $536m, which KordaMentha is yet to assess. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion Hams said that the lack of investment by the former owner was so extreme that even the traffic lights leading to the steelworks were not working. 'The steel works and the mines were really relying on the resilience and personal capital of employees and subcontractors to keep operations running in seriously and really challenging circumstances,' he said. The project supports about 4,000 direct and indirect jobs, according to the administrators. The state and federal governments have provided a support package to ensure the steelworks keep operating, and workers are paid, while administrators look for a new owner. GFG's representatives, who did not attend the meeting on Monday, said in a statement they were pursuing financing options when administrators were appointed. 'Our major suppliers across OSM were aware of the capital raising processes, which were delayed and impacted by heightened media speculation. Unfortunately, the financing could not be completed before the administration,' the GFG statement said. 'While we are saddened by the decision of the South Australian government, we continue to believe in the strategic importance of Whyalla, and will fully support a viable long term solution for the future of the Whyalla steelworks.' Guardian has contacted GFG for comment.
