Rex Patrick says the PM should back Whyalla, as GFG provides reassurance on payments

Senator Rex Patrick says steelmaking is a core part of our economy and national security, and that the Prime Minister should tell the people of Whyalla he has their back.

Independent senator Rex Patrick.

The federal government must commit to backing the future of Whyalla because “If you can’t make steel, you might as well give up’’, independent senator Rex Patrick says.

Mr Patrick has called on Prime Minister Scott Morrison to guarantee the future of the steelworks at Whyalla, but was not specific about what form that backing could take.

Meanwhile the state’s small business commissioner John Chapman said he had received a reply from the steelworks’ owner Sanjeev Gupta, executive chairman of GFG Alliance, who wrote to him to “provide ... some assurance” about the company’s capacity to pay its suppliers.

Mr Chapman wrote to Mr Gupta last week seeking assurances that suppliers would be paid, and said that in his reply, Mr Gupta said that the business overall was performing well.

“Firstly GFG Alliance and its core operating divisions have adequate funding for their current needs, while its refinancing plans to broaden its capital base and to obtain longer term funding are progressing well,’’ the letter reads.

GFG Alliance executive chairman Sanjeev Gupta next to a solar plant test rig near Whyalla.

“This is a process that has been underway for some months irrespective of recent developments and we hope to come to a satisfactory conclusion in the next few months.’’

Mr Chapman said he had spoken with senior management at GFG and would be visiting Whyalla himself on Friday.

GFG’s main financial backer, Greensill Capital, failed this week, with its exposure to GFG estimated in some reports as high as $US5bn.

Mr Chapman said earlier this week GFG was not using Greensill Capital’s supply chain financing model to pay suppliers in Whyalla, and there were as yet no reports of late payments from GFG.

SA’s Small Business Commissioner John Chapman in Whyalla in 2017.

Mr Patrick said with GFG still looking a new financier, it was too early to speculate on what support, if any, would be needed and in what form.

But he said the Prime Minister was more than happy to travel to Whyalla for GFG owner Sanjeev Gupta’s 2018 announcement about his ambitious expansion plans, and should also be front and centre at the moment when things were looking shaky.

“He can’t go there simply in the good times, and not stand up when there’s uncertainty, to make sure people in Whyalla are going to feel comfortable that their futures are assured.’’

“The government can’t let Whyalla fail.

“Whyalla is such an important facility in terms of national resilience and national security, it’s value-add, it’s important for Whyalla, it’s important for South Australia, it’s important for Australia.’’

Mr Patrick said steelmaking was essential to an advanced economy and needed to be retained at scale.

“The fact is we seem to be very good at exporting rocks.

“We need to value-add, that’s exactly what they’re doing in Whyalla.

“I understand that needs to go through a transformation, it needs to be modernised, but that’s the sort of thing we need to be doing to grow our economic pie.’’

Mr Patrick said he hoped it did not happen but were GFG to go into administration “there would be a commercial process whereby they would look for willing buyers, but in the end the government needs to make sure the people in Whyalla understand that they are backed by the Federal Government.’’

Mr Patrick said the form of the “backing” would depend on what the fallout was, should GFG find itself in administration.

GFG for its part has this week reiterated that its Australian operations are profitable and trading well.

A spokesperson for Federal Minister for Industry Karen Andrews said: “It would not be appropriate for the Government to speculate about the finances of a private company.

“We are, however, monitoring the situation closely.”