Arrium administrators seek stability as potential buyers settles in for Whyalla site visits

ARRIUM’s administrators have entered into a fixed power contract to avoid volatility that has struck the South Australian electricity market in recent times.

SA Treasurer Tom Koutsantonis (second from left) and Federal Industry Minister Greg Hunt (centre) toured Korean steelmaker and potential Arrium buyer Posco’s facilities in early November.

ARRIUM’s administrators have entered into a fixed power contract to avoid volatility that has struck the South Australian electricity market in recent months.

The contract is in place for at least the first quarter of 2017, by which time it is hoped the company, which has the Whyalla steelworks as its highest-profile asset, will be sold.

“We don’t want any volatility around pricing so we can deliver a product at best-practice cost,” KordaMentha’s Mark Mentha said.

“From a business volatility point of view, we’ve got our (power) back-up systems in place — with gas and steam — and we’ve hedged our forward electricity requirements.”

British businessman Sanjeev Gupta and executives from his Liberty House steel and commodities group toured Arrium’s Whyalla operations this week — the first of four site visits from potential buyers that will run until early December.

Mr Mentha would not confirm the Liberty visit, citing confidentiality clauses, or who the other interested parties are, although it is understood they are foreign private equity firms, rather than specialised steelmakers.

Arrium administrator Mark Mentha. Picture: Adam Taylor

The already disclosed bidder is Korean steel giant Posco, which was paid a visit earlier this month by SA Treasurer Tom Koutsantonis and Federal Industry Minister Greg Hunt.

“We’re very pleased with the participants in the (sale) process,” Mr Mentha said.

Mr Koutsantonis would not comment on the Liberty House visit — or that of any other interested buyer — other than to say that the State Government has committed to meet with all potential purchasers.

Mr Koutsantonis and his Cabinet colleagues will be in Whyalla this weekend where they will tour the steelworks and meet with affected workers — and likely Mr Gupta, who will still be in town.

On Tuesday, ministers will visit BHP’s Olympic Dam operations, which, like Arrium, didn’t have full power restored for a fortnight following South Australia’s September 28 statewide blackout.

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