Posted on 20 Feb 2025
The South Australian Government has placed the owner of the Whyalla Steelworks and its associated mines, OneSteel Manufacturing, into administration.
The Malinauskas Labor Government has appointed KordaMentha as the administrator, effectively removing control from GFG Alliance. This comes after the government lost confidence in GFG's financial capability to pay its debts and secure the necessary funding for continued operations, Kallanish learns from the South Australian Government press release.
During the administration period, KordaMentha will assess restructuring options, including a potential sale, while ensuring business continuity. The administrator has committed to maintaining operations, and workers and contractors will continue to be paid under a government-backed guarantee. The first meeting of creditors will be held on 3 March, KordaMentha said.
To facilitate the transition, the State Government passed an urgent amendment to the Whyalla Steel Works Act 1958 on Wednesday morning to strengthen its claim over GFG's debts and impose new transparency obligations on the steelworks' ownership.
Premier Peter Malinauskas stated that the government had exhausted all avenues before taking this step, emphasising that GFG had failed to fulfil its commitments despite repeated opportunities to do so. Malinauskas told local media his government was forced to act swiftly due to not only debts of more than AUD 300 million($190m) from GFG but workers not being paid.
The government has said it is committed to ensuring that the steelworks remain operational and viable under new ownership.
Whyalla Steelworks produces 75% of the country's structural steel and is the only domestic producer of long products. It produces 1.2 million tonnes/year, and its output is essential for major infrastructure projects.
Minister for Energy and Mining Tom Koutsantonis noted that with mounting unpaid debts and significant sums sent offshore in recent years, GFG's creditors could no longer afford to wait.
KordaMentha has indicated it will appoint an experienced special adviser to support the administration and is engaging with potential buyers, including BlueScope.
GFG Alliance did not provide any substantive response on Wednesday. Last week, the company's Chairman issued a statement acknowledging the challenges, saying, "the prolonged disruption to the operation of the blast furnace has taken a toll, but I want to assure you that we are making meaningful progress."
The statement further highlighted the ongoing efforts to address the situation, noting, "while we still have considerable work ahead, these clear improvements are vital as we work to catch up with our creditors-who have shown remarkable patience-and to whom we extend our deepest gratitude."
Source:Kallanish
