AN international conglomerate run by a billionaire British industrialist has signed a deal to buy the Arrium steelworks and mining operations at Whyalla — and promises to protect the jobs of an estimated 5500 workers.
London-based GFG Alliance has agreed to purchase the Arrium group of companies, and speedy approval for the sale is expected from the Foreign Investment Review Board.
Premier Jay Weatherill said the sale was “a great victory for Whyalla and an extraordinary victory for South Australia”.
He would not say what the deal would be worth but the State Government has already budgeted a $50 million contribution.
Arrium was placed into administration in April 2016 with debts of $2.8 billion. It was previously known as OneSteel and until 2000 was part of BHP, which decided to divest its Australian steelmaking operations.
It directly employs more than 3000 people in Whyalla, while thousands more jobs are reliant on the region’s biggest employer. Closure — which at one point looked likely — would have been a devastating blow to the Spencer Gulf town and the broader South Australian economy.
Administrator KordaMentha said GFG Alliance, which was originally known as Liberty House and is led by Gupta Family Group executive chairman Sanjeev Gupta, had submitted a modified offer on Tuesday night.
The sale is still subject to approval by the Arrium Committee of Creditors and the Foreign Investment Review Board but that process is expected to be complete by the end of next month.
Mr Gupta said he was thrilled to acquire Arrium and said the deal would secure more than 5500 jobs.
“We have a vision to create a vertically integrated and sustainable industrial business that encompasses mining, metal recycling, primary metal production, engineering and distribution, and which also includes the use of renewable energy consistent with our GREENSTEEL strategy,” he said. GREENSTEEL involves using renewable energy to power steel production.
“We aim to leverage the advantages of integration across the value chain, from raw materials and metal production to high-end engineered products.
“The Arrium business fits perfectly with this strategy and we believe it has an exciting future leveraging our GREENSTEEL vision, which has been well proven in the UK.”
GFG was not the original preferred bidder, following a process which had whittled down offers, but made a modified offer on Tuesday night after the exclusivity period granted to South Korean consortium Newlake expired on Friday and no deal had been reached.
Ministers will meet with GFG representatives on Thursday.
Treasurer Tom Koutsantonis said it was “far too early” to discuss details of the deal but said the State Government was “well advanced in discussions” with the Federal Government “about what we can offer”.
Mr Koutsantonis said there had been assurances from GFG that 5500 direct and associated jobs would be maintained.
“This city is completely linked to the operations of the steelworks,” he said.
“Think of the pressure that this community has been under. There have been divorces, financial stress and strain, redundancies. We finally now have clear air.”
Mr Weatherill said he would soon travel to Whyalla to discuss the development with locals, and was confident the steelworks would grow as a result of the deal.
“I think there’s going to be reinvestment in the steelworks. I think everybody can look forward to a secure future,” he said.
“I have spoken to Mr Gupta this morning to offer my congratulations and he reaffirmed his strong commitment to the long-term future of the Whyalla operations. This has been an extraordinary turnaround from the brink of collapse to now a very bright future.”
State Opposition Leader Steven Marshall said the outcome was “a great example of what can be achieved in adverse circumstances when the Federal Government and State Government work together for the common good”.
Mr Koutsantonis also struck a bipartisan tone, paying tribute to the work of Federal Minister for Industry Arthur Sinodinos for his assistance in securing the deal, and said it was critical to the national interest that Australia continues to produce its own steel.
Local MP Eddie Hughes — who was previously employed at the steelworks — said the people of Whyalla had experienced “a lot of pain” in recent years but would bounce back following today’s developments.
Whyalla Mayor Lyn Breuer said she felt the clouds that had been hanging over Whyalla for the last 14 months had lifted.
“GFG are experienced steelmakers and miners and that adds up very well for Whyalla,” she said.
Federal Treasurer Scott Morrison labelled the deal “great news” for Whyalla and the Australian steel industry and expected no issues with Foreign Investment Review Board approval.
“The next steps are the approvals of the creditors but also the Foreign Investment Review Board process, which will move speedily,” he said.
“We have already been in a position to agree the conditions around the Foreign Investment Review Board process and I expect to sign off on that later today, which I think will give the added certainty for the workers in Whyalla and the community in Whyalla which demonstrates a very positive future for them.
“It would have been an anxious period of time for those workers and for the families in those communities and we are pleased for that outcome.”
Australian Workers’ Union national secretary Daniel Walton said it was a great day for Arrium workers.
“This is the outcome we have been working so hard toward for well over a year. This is the certainty we wanted to deliver for workers and their families,” Mr Walton said.
“GFG Alliance enjoys an outstanding international reputation as a good corporate citizen with a responsible, long-term vision of success.
“They have invested strongly in heavy industry in Europe and the UK and it is this mindset they will bring to Australia.”
WHO ARE THE NEW OWNERS?
GFG Alliance was founded by the British Gupta family.
Executive chairman Sanjeev Gupta is a billionaire industrialist with a track record of investing in the steel industry. He proudly says he has never forced a worker to take redundancy.
GFG has a global turnover of $12.5 billion and engages in an “end to end” business model that encompasses mining, energy generation, metals and engineering.
It also includes interests in financial services and property, and runs a charitable foundation.
Its website said it “aims to trigger the revival and regrowth of industry in the countries where it operates. Its main focus is sustainability — both economic and environmental — as a means of delivering a long-term solution to cyclic industries. It has a collaborative and innovative approach which is transforming businesses, communities and the wider economy.”
WHAT’S INCLUDED IN THE SALE?
GFG Alliance will acquire the following businesses as part of the Arrium sale:
Iron Ore Mining Operations — Produces approximately 10 million tonnes per annum of iron ore — haematite and magnetite pellets — for export and internal supply.
Whyalla Port and Rail infrastructure.
Whyalla Steelworks — 1.2 million tonnes per annum blast furnace operation and Australia’s only producer of rail and hot rolled structural steel products.
OneSteel Scrap Recycling — A steel scrap and recycling business with a national network of collection and processing facilities handling around 1.4 million tonnes per annum.
OneSteel Secondary Steelworks — 1.4 million tonnes per annum from two electric arc furnaces with three bar and rod rolling mills (Sydney, Melbourne, and Newcastle).
Australian Tube Mills — Australia’s largest steel pipe and tube manufacturer.
OneSteel Reinforcing, ARC and OneSteel Metal Centres — Australia’s leading general steel distributor and steel reinforcing solutions provider.
Originally published as ARRIUM SOLD: Thousands of jobs saved