GFG Alliance’s Whyalla OneSteel contractors and suppliers fear they won’t survive another collapse
Hundreds of contractors still paying the price of the 2016 Whyalla collapse fear they’ll be destroyed if steel operations are wound up.
SA Business
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More than 600 contractors and suppliers and thousands of workers are seeking government assurance of a plan B amid the ongoing uncertainty over GFG Alliance’s Whyalla operations, with some likely to be “decimated” by another collapse in the “one-horse town”.
Whyalla Hose & Fitting Services has been a supplier to the steel operations for more than 26 years, losing $500,000 in the collapse of Arrium in 2016.
“We are still paying back a support loan from the state government to tide over that crisis and this is just disappointing and deja vu,” says Dave Bruce, founder of WH&F, which employs 17 staff.
“Different businesses got different loans and there’s a number of us still paying back those loans, which really should have been grants.
“Contractors just wouldn’t survive, they would be decimated. Contractors have been the forgotten people and we need to get some reassurance from the government.
“They have been very quiet, and are not giving us much hope.”
He said there were some positives with the steelmaking operations said to be profitable and viable with his business enjoying strong work flow.
“We need to ensure we preserve what we have here in Whyalla given it is pretty much a one-horse town.”
Separately, GFG service provider One Rail Australia (formerly Genesee & Wyoming Australia), said in a statement it was “business as usual”, while Bis Industries declined to comment.
More than 2000 Australian jobs hang in the balance as Whyalla “saviour” Sanjeev Gupta’s creditors on Tuesday sought to seize control of his local steel operations through an application in the NSW Supreme Court.
GFG Alliance has vowed to fight the move to appoint liquidators to key parts of the Liberty Primary Steel group, a complex structure that includes GFG’s Whyalla operations.
Citibank, acting on behalf of Credit Suisse, filed a winding up in insolvency application for OneSteel Manufacturing and Tahmoor Coal (colliery in NSW) on Tuesday in the NSW Supreme Court.
If successful, the move could trigger the appointment of liquidators to the Whyalla steelworks and associated mines, which together employ more than 1800 South Australians, and to the Tahmoor colliery in NSW.
Australian Workers’ Union SA representative Peter Lamps said while there was concern among its members, “the lay of the land is different” from what it was five years ago.
“Our workers are focused on making quality Australian steel going with the broad consensus on its profitability and viability.”
The union has sought a meeting with the state government to discuss contingency plans.
“We want to get an idea of the level of preparedness of the government on the issue but we have not had the courtesy of a reply yet,” he said.
Whyalla Chamber of Commerce and industry president Malcolm McLeod said while the news was “a huge concern” for the City of Whyalla, there was need to have “a business as usual” attitude.
“The steelworks and the community need to stay focused on steel making and continue to fill the orders,” Mr Mcleod said.
“The steel and ore markets remain strong, Whyalla remains profitable and is in a cash positive position.
“This complicated situation is not a 2016 Arrium situation, Whyalla steelworks is a profitable and well-run business in 2021.”
SA Small Business Commissioner John Chapman said he was monitoring the situation for any impact on payments to the 110 suppliers in Whyalla and 500 across the state.
“I am expecting the payment run to go through as expected this Friday,” he said.
SA Treasurer Rob Lucas on Wednesday reiterated his message for people to not “leap to alarmist conclusions”, besides confirmed ongoing federal discussions on the matter and offering some comfort to residents of Whyalla.
“I don’t think anyone is complacent, I think they are all watching very closely for the reasons that you’ve outlined, but I think the one comforting thing … is there’s clearly an indication there if they got to that set of circumstances they’d be looking at Whyalla operating as an ongoing concern.
“I think the other issue that we have seen coming out of COVID is that sovereign capacity and important industries, and steel clearly is an important industry, is something which is important to the national government and to the nation, so I think that is something which would give some comfort also to the Whyalla people.”
Local Labor MP Eddie Hughes said Whyalla was “battle-hardened”.
“We have risen to meet all of our past challenges and we will meet this challenge,” Mr Hughes said.
“We are taking this a step at a time while working towards our goal which is to sustain the steel industry in Whyalla for generations to come.
“We have all of the resources needed to do that- an abundance of iron ore, massive energy resources and a skilled workforce.”
Whyalla has the only integrated steelworks in the nation that produces structural steel and rail in addition to providing 500,000 of intermediate steel product for InfraBuild mills in the eastern states.
“The plant at Whyalla is an important part of our sovereign manufacturing capacity and is strategically important.”
Originally published as GFG Alliance’s Whyalla OneSteel contractors and suppliers fear they won’t survive another collapse
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