GFG Alliance takes ownership of Whyalla’s steelworks, plans huge increase in production

EXCLUSIVE: British billionaire Sanjeev Gupta takes ownership of Whyalla’s steelworks today — and has plans for a huge increase in production, and a name change.

• Arrium steelworks in Whyalla saved, sold to GFG Alliance
• Meet the British billionaire who has saved Whyalla
• GFG Alliance’s bid for Arrium given all clear
• Plan for the future: Renewable energy, new technology and exports

BRITISH billionaire Sanjeev Gupta has revealed his ambitious plans to revitalise Whyalla’s steelworks — including a new state-of-the-art plant capable of increasing production by more than 400 per cent — as he takes ownership of Arrium on Friday.

The new owner and GFG Alliance executive chairman Sanjeev Gupta told The Advertiser the production jump was one of several measures that would make the rebranded Liberty OneSteel steelworks “world class”.

Mr Gupta also wants to increase the port’s capacity from 13 million tonnes annually to 50 million tonnes — a task that will likely be aided by the State Government’s $50 million contribution for capital improvements. There are also plans for pumped hydro energy production using mine pits.

“It’s all about opening Whyalla up to the world,” he said.

Building a co-generation power plant that made the steelworks self-sufficient would be the first priority, a task Mr Gupta said would take “several months, not years”.

“There’s a big power problem in Australia, especially SA, and the plant has enough waste gases of its own to make it enough power to service its own needs — that’s a no brainer,” he said.

On Friday, Mr Gupta will be given the keys to Arrium by administrator KordaMentha at a handover ceremony in Whyalla — an event that looked unlikely when the company collapsed under a multibillion-dollar debt load last April.

He will announce that the Arrium name will be dropped from all operations. The Whyalla steel division will be rebranded as Liberty OneSteel — combining GFG’s Liberty Steel brand in the UK with the existing OneSteel — while the iron ore mining and port businesses will be called SIMEC Mining and SIMEC Infrastructure.

SIMEC (Shipping, Industry, Mining, Energy and Commodities) is GFG’s energy and natural resources arm, overseen by Mr Gupta’s father, Parduman.

Sanjeev Gupta, executive chairman of the GFG Alliance, visiting the Arrium steelworks at Whyalla Picture: Bianca De Marchi

“It’s a beginning of a journey, that’s what’s exciting,” Mr Gupta told The Advertiser.

“Whyalla is an opportunity for real growth and if we can do the investment plans as we are expecting to be able to, then it’s a real platform to really use as a launch pad to grow a much bigger business.”

While Mr Gupta would not reveal the Arrium sale price — understood to be around $700 million — he said it was the largest single investment made by GFG, eclipsing the £330 million ($540 million) it paid Rio Tinto late last year for a range of UK assets.

Mr Gupta, 46, has previously outlined GFG’s initial $1 billion transformation of the Whyalla operations — home to half of Arrium’s 6000 employees nationally — which he expects to enact within three years.

After a 100-day analysis period, in which Mr Gupta will personally act as chief executive, other near-term investments will revolve around improving the steelworks’ technology and efficiency.

“The transformation is very important because that underpins everything else — you get that wrong and nothing else gets built properly,” Mr Gupta said. That, he said, would lay the foundation for a more than threefold increase in annual steel production and capacity at the company-owned port.

Currently capable of producing 1.2 million tonnes of steel a year, Mr Gupta plans to build a second plant that would allow for production of up to five million tonnes a year.

“It’s very exciting to spend $1 billion — not a small amount of money — on upgrading this plant, but then to be able to build 4-5 million tonne steel (capacity), a gigawatt of power, build a 40-50 million tonne port, build 20 million tonne magnetite business — each one of those is enormous and a very, very exciting proposition,’’ he said.

“That is a big investment, but would turn it into a world-class port, as well as a world- class steel plant, a world-class mining business, as well as being a world-class energy provider — that’s the vision, bringing a lot of things together, but the first job is to sort out the steel plant.”

Forming part of a big export push, local production will be integrated into GFG’s overseas activities, including several UK steel mills. “Having a captive market overseas is a great comfort and great support, having our own capacity which can suck in some of the excess capacity in Australia for now is a great thing,” Mr Gupta said.

Fitter and turners Ken Roesler, 38, and Paul Monaghan, 51, at the caster maintenance services area of the heavy machine Shop at the Whyalla Steelworks. Picture: Dylan Coker

Industry Minister Arthur Sinodinos praised GFG for its long-term vision in Whyalla, which he said could benefit from Federal Government funding programs such as the Clean Energy Finance Corporation.

“We’re excited by Mr Gupta’s vision of expanding the role of Whyalla and we’ll sit down with him in due course to look at what that means in terms of both federal and state government supporting that vision,” he said.

SA Treasurer Tom Koutsantonis said Friday marked the beginning of a new chapter for the town. “There is a renewed sense of confidence and optimism about the future in Whyalla since the sale of the steelworks and mine, and I congratulate the people of Whyalla and Mr Gupta on this important day,” he said.

Australian Workers’ Union national secretary Daniel Walton said workers looked forward to joining GFG — which is on the lookout for other Australian acquisitions — on the journey to Whyalla becoming a world player.

“That will provide new opportunities for not only Whyalla, but all of SA — truly an amazing outcome,” he said.

A community march to celebrate the Arrium sale will follow Friday morning’s handover ceremony. It will commence from Wilson Park and finish at the Ada Ryan Gardens.

The buyers are back

THERE’S been a “definite and obvious” increase in attention of Whyalla real estate during the past fortnight, agents say.

Blights Real Estate directors and agents Gregg Utting and Fiona Quinn. P icture: Bianca De Marchi

Lifelong resident and co-owner of Blights Real Estate, Fiona Quinn, will have sold six properties in that time, assuming finance is approved — a result well above recent averages.

The majority of offers have come from locals, although there has been some interest from interstate

“People in Whyalla lose confidence quickly and gain it quickly,” she said.

“It’s been the toughest it’s been in a long time, but just in the past couple of weeks there’s been a significant difference among most people in the town.”

Ms Quinn, a local agent for more than 25 years, said the price for a three-bedroom house started around $250,000 — around a quarter below the peak of the mining boom.

“There’s been a few prospective buyers who have acknowledged that they need to buy sooner rather than later because prices will increase.”

Gail’s sweet gamble

GAIL Mcilwaine did the unthinkable late last year.

In a town gripped by uncertainty and, in parts, pessimism, she opened a store on the half-empty retail strip of Patterson St.

Gail McIlwaine.

The Whyalla resident of 47 years said Matilda’s Place, which sells both homewares and a range of sweets, was her way of making a statement.

“We had a few empty shops and I thought ‘someone has to stay positive’. That’s what pushed me along,” she said.

In the past few months, since the sale of Arrium became all but certain, Ms Mcilwaine, 55, has noticed an upturn in trade.

A similar situation has occurred with her husband’s roller-door maintenance business.

“All last month and this month has been really good,” she said. “I’ll be staying here for the long haul.”

Ms Mcilwaine said another business had opened on Patterson St in the past few weeks.

“I’m not sure if they (empty shops) will all be filled again, but it’s heading in that direction,” she said.

“My view is that people, business owners included, are feeling a lot more positive about things.

“And that can only be good for this community.”