Gateway to the Australasian Steel and Metals Industry
Gateway to the Australasian Steel and Metals Industry
Christmas Gift For Whyalla, But No Festive Season
GFG Alliance, the parent company of the Whyalla steelworks, says it has secured $153 million in funding from an un-named major global credit fund. “The milestone funding initiative will bolster cash flow and part of the proceeds will be used to provide critical capital into the Whyalla steel and mining operations to support its suppliers, employees and the ongoing maintenance work at its blast furnace,” GFG said in a statement. The British businessman, Sanjeev Gupta, who owns GFG Alliance said: “Our new round of funding reaffirms my faith in Whyalla and our Back to Black plan, which aims to restore sustainable profitability and support the future of steel and mining operations in the region.” GFG said the new funding is expected to be finalised by the end of this year and will build upon the $400 million that the broader GFG Alliance group has provided to the steelworks over the past two years. In November, GFG replaced the Whyalla steelworks managing director, Tony Swiericzuk, with industry veteran, Theuns Victor. In a letter to staff, Mr Victor said: “The reality is we are losing approximately $1 million a day”. In August, 48 people at the steelworks were sacked as reports emerged of contractors and suppliers not
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being paid. The steelworks´ coal-fired blast furnace was offline for about four months earlier this year and went offline again in September; and remains so (at the time of publishing). In October, the rail operator Aurizon said it had suspended some of the rail haulage services it provides to the Whyalla steelworks due to unresolved issues – believed to be unpaid bills. ASN has not seen the details of the new $153 million funding. However, it will be interesting to see how much of the money is eventually spent on the Whyalla situation, and how much – if any – is seconded to other parts of the Gupta business empire.
The problems besetting Whyalla are running in parallel to and partly affect those at InfraBuild, another of Mr Gupta´s Australian assets. In his November message to staff, InfraBuild´s CEO, Francisco Irazusta, admitted that 2024 “has been a year that has tested the resilience of the Australian steel industry”. He said softer market conditions had led to a period of low demand for steel. “This is not unique to Australia, with many countries around the world also experiencing lower demand for steel in an over capacity scenario which is tensioning prices downwards and further impacted by exports from China globally,” he said. The Australian Financial Review (AFR) reports having sighted documents in a presentation by InfraBuild to bondholders which show InfraBuild, slumped to a $35.5 million loss for the three months ended September 30 this year. This would be the third consecutive quarter of losses for InfraBuild, which lost $18.6 million in the 12 months to June 30. That compared with a profit of more than $239 million one year earlier. InfraBuild’s net debt, according to the presentation circulated in late November, increased by $68 million to $1.09 billion.
InfraBuild and the Whyalla steelworks are part of Mr Gupta´s global steel interests. GFG Alliance, which is private and family-owned, has long suffered from a problem of perception. Its opaque accounting system has led the UK’s corporate registry to pursue Mr Gupta for allegedly failing to file audited tax returns for 76 of his companies listed in Britain. The company´s troubles began in earnest after the collapse in 2021 of its main financier, Greensill Capital, run by the Australian Lex Greensill. Credit Suisse, which is now part of UBS, continues to pursue GFG Alliance for US$1.3 billion (AUD $2 billion) in debts. Meanwhile, for the past three years the United Kingdom´s Serious Fraud Office has been investigating GFG Alliance for suspected fraud related to its dealings with Greensill Capital. The company denies any wrong-doing. More recently, in late November, the world´s second largest steelmaker, ArcelorMittal, successfully argued in a London court that one of my Gupta´s European companies should be placed into administration over a $140 million debt it owes ArcelorMittal. The company, Liberty Steel East Europe (Holdco), is a holding company for entities controlling six of Mr Gupta’s eight continental European steelworks and will now enter administration. ArcelorMittal says it is owed the money after selling the plants to Mr Gupta in 2019.
Australia´s weak economic growth figures, published last Wednesday, imply that the soft market conditions affecting our steel industry are going to continue. The Australian Bureau of Statistics said GDP for the September quarter came in at just 0.3% and at 0.8% for the year. This means the economy’s annual growth rate has weakened even further from the very weak growth recorded in the June quarter. If some good news can be found in the figures it is that Government spending and investment climbed to a record high share, at 28% per cent of GDP in the September quarter. Much of this was spent on steel-hungry infrastructure projects. The Reserve Bank of Australia had been expecting annual growth to pick up to 1.5% by the end of this year, but at this stage in the cycle that seems unlikely.
Finally, the winners of the 2024 Australian Steel Institute (ASI) National Steel Excellence Awards were announced at a dinner in Sydney on November 21. The Large Buildings over $10 million category was won by the Art Gallery of NSW Sydney Modern Project. Judges praised the project’s steel solution as “critical” to meeting the challenges of this project location, being partially located on a land bridge over a vital piece of infrastructure. The remaining category winners were:
The Young Achiever award was won by Sydney-based Mohammed Kassira. Full details of the Awards can be found at: www.steel.org.au/asi-awards-portal
