Whyalla steelworks forced into administration by SA government, GFG no longer running site

The South Australian government has forced the Whyalla steelworks into administration as it attempts to resolve the crisis at the embattled site.

Changes to the Whyalla Steel Works Act were rushed through both houses of state parliament on Wednesday morning, before being signed off by the SA Governor.

The steelworks, which is owned by GFG Alliance, has been in crisis after failing to pay tens of millions of dollars in royalty payments to the government, and millions in unpaid bills to creditors.

GFG, who took over in 2017 will no longer run the steelworks, and KordaMentha has been appointed as administrator.

A GFG spokesperson said they are "seeking advice" on their options. 

Speaking to the ABC's 7.30 program on Wednesday night, SA Premier Peter Malinauskas said his government was forced to act swiftly due to not only debts of more than $300 million from GFG but workers not being paid.

"There have been periods where payments have run late but ultimately they [workers] have been getting paid," Mr Malinauskas said.

"Workers have been getting paid but we have started to see that change in recent months where huge lengths in time were elapsing with no evidence of people going to get paid, creditors getting delivered what they are owed by GFG.

"That's what invited a change in response.

"We monitored all the reports globally but here on the ground that hasn't really started to manifest itself into a crisis that necessitates action until recent months."

With Whyalla now in administration, Mr Malinauskas said suitable buyers were being sought and the premier said he had "reason to believe" Bluescope may be interested.

"They're monitoring the events in Whyalla closely and I look forward to that unfolding," he said.

Bluescope chief executive Mark Vassella told The Business earlier this week that Mr Malinauskas had been in contact and that any involvement from Bluescope would happen if a buyer was needed.

'Unacceptable' for steelworks' operations to be compromised

Earlier on Wednesday, Mr Malinauskas said it was "unacceptable" for such a "critical piece of economic infrastructure for the nation to be in a situation where its ongoing operations are so severely compromised".

Just days ago, GFG chair Sanjeev Gupta released a statement, saying the company would sell its stake in a New South Wales coal mine to repay Whyalla creditors.

But Mr Malinauskas said the government had received advice from its steel task force that the financial position of the owner of the steelworks' was not just deteriorating, "it was likely to continue deteriorating into the future".

"GFG are no longer running the Whyalla steelworks. The South Australian government has subsequently appointed KordaMentha to act as the administrator of the steelworks," Mr Malinauskas said.

"It will allow for the administrator to stabilise the business, put it on a far surer footing in the immediate future with a view to secure its long-term future.

"Given the state of the steelworks were going from bad to worse … it was approaching a point where it would be irredeemable. That is unsatisfactory. That invites government intervention."

The government said the Whyalla steelworks was owned by OneSteel Manufacturing Pty Ltd, the legal entity that is part of the GFG corporate group.

In a statement released on Wednesday afternoon, a GFG Alliance spokesperson said: "The South Australian Government has made an announcement regarding One Steel Manufacturing Pty Ltd (Whyalla Steelworks).

"GFG is assessing what this means and is seeking advice on its options," the spokesperson said.

"Our concern is first and foremost the wellbeing and safety of our employees."

The spokesperson also said that GFG's steel company, InfraBuild, is a separate entity from the Whyalla steelworks. 

"Its [InfraBuild's] supply chain is resilient, in addition to its own domestic high quality production facilities it has regular supply from mature international suppliers," the spokesperson said. 

The move to place the site in administration was preceded by crucial amendments to the Whyalla Steel Works Act.

In an extraordinary step on Wednesday morning, changes were rushed through both the lower and upper houses in a matter of minutes.

The bill was introduced by Energy Minister Tom Koutsantonis, and was entered into Hansard without being read aloud in the chamber.

"I move that standing orders be and remain so far suspended as to enable the introduction of a bill without notice forthwith and the passage through all stages without delay," he told parliament.

The bill passed the upper house without any opposition from the Liberal Party or the crossbench.

Industry support package to be announced

Mr Malinauskas, who will travel to Whyalla on Wednesday afternoon, said he would announce "one of the most comprehensive industry support packages that this nation has ever seen" on Thursday.

"There was an option that we could provide assistance to GFG and Mr Gupta, there was an option that we could have bailed out GFG, but we weren't going to do that," he said.

"This isn't about GFG, this is about the critical economic infrastructure that is steelmaking production in this country.

"That's the future we've got to focus on, not any individual owner of the steelworks, so our mind turns to supporting the industry and the people that work within it to be able to secure sovereign steelmaking in this country.

"This is an investment in steelmaking in this country, and I look forward to going through a lot of detail about how we do that tomorrow."

But Opposition Leader Vincent Tarzia said the government had "absolutely taken its eye off the ball when it comes to Whyalla".

"What we're now worried about is the interest of mum-and-dad contractors, small business owners and operators in Whyalla, and making sure that they get paid," he said.

Mr Malinauskas will be joined in Whyalla on Thursday by Prime Minister Anthony Albanese and Federal Industry Minister Ed Husic.

A spokesperson for Mr Husic said they had been "working closely with the Malinauskas government" and they would "have more to say shortly".

"What's going on in and around Whyalla can't continue — workers kept in the dark, creditors — including the SA government — unpaid, a proud, industrial city left wondering about its future," the spokesperson said.

Assurances for workers

Mr Malinauskas said workers in Whyalla had faced "ongoing uncertainty for months".

"We have seen workers being made redundant, particularly at the mine, more than that, we've seen workers being made redundant on an increasingly frequent basis from contractors because of the uncertainty," he said.

"The administrator will stabilise the business and seek to stop that occurring.

"For workers employed by OneSteel Manufacturing, that is workers at the steelworks itself, they will now have their futures assured.

"They're in a situation now where they're not going to wake up tomorrow and the administrator is making people redundant.

"There will be a process that the administrator goes through and the new owners potentially will make their own decisions.

"But as it stands today … people working at the steelworks today will be working there tomorrow and into the foreseeable future."

Creditors meeting scheduled

Administrator KordaMentha said it intends for the Whyalla steelworks and its associated mining operations to continue operating during the voluntary administration period.

"As administrators, our job is to examine the financial position of the company, stabilise the business and maximise the chances of the business continuing in the interests of all stakeholders," KordaMentha partner Mark Mentha said in a statement on Wednesday afternoon.

"With the funding support of the South Australian Government and support from other interested stakeholders, Whyalla Steelworks and Mining will remain in business under our control while we assess the next alternatives and complete our investigations.

The first meeting of creditors will be held on March 3, KordaMentha said.