Whyalla narrowly avoided a wipe-out. Now residents of South Australia’s steel city are bracing for a boom, because of the vision of one man
IT’S not the best known economic indicator, but the fact that the hairdressers of Whyalla are seeing an uptick in business gives you an indication of how sentiment in the once-beleaguered steel town is faring.
IT’S not the best known economic indicator, but the fact that the hairdressers of Whyalla are seeing an uptick in business gives you an indication of how sentiment in the once-beleaguered steel city is faring.
Just more than two years ago, in April 2016, “grim” was probably the best way to describe the mood in Whyalla, where the city’s main employer, Arrium, which owned the steelworks and neighbouring iron ore mines, had just gone into administration with debts of more than $4 billion. There were fears it could be game over for the steelworks, bringing to an end decades of steelmaking in the city, which has a proud industrial heritage stretching back to BHP’s acquisition of iron ore tenements in the region as far back as 1899.
But that grim fate was not to be. Administrator KordaMentha managed to keep the steelworks operating - negotiating a nearly catastrophic statewide blackout in the process - and after a bidding war which came down to a Korean company and then relatively-unknown (at least to South Australians) British industrialist Sanjeev Gupta, the latter won the day, with his company, GFG Alliance taking control of the assets.
Mr Gupta signed on the dotted line a year ago, on July 5, 2017. And what a year it’s been since then. It’s interesting to muse what might have happened had Mr Gupta not won out over the Koreans. But if his ambition for Whyalla and South Australia reach fruition - or even get halfway there - the impact on the city and the state could be transformational. Mr Gupta laid out his plan for Whyalla not long after buying Arrium, and has continued to expand his vision in the year since.
So far he intends to:
- install 10GW of combined energy production and storage nationally
- Refurbish the Whyalla steelworks
- Expand the Whyalla port
- Build a bigger lithium ion battery than the current Tesla battery at Jamestown which is currently the world’s largest
- Set up a bank to cater for companies in the $50 million-$500 million turnover range
- potentially manufacture electric vehicles in Australia, and
- Eventually get involved in new housing developments in Whyalla.
Last year he bought a majority stake in SA renewables company Zen Energy, to help him achieve his renewables vision, which fits into a global strategy called Greensteel, which aims to make steelmaking greener.
Plans as ambitious as these take a while to get going - you don’t just stroll into a steelworks and convert its processes overnight. But business owners and locals The Advertiser spoke with this week , rather than being worried about their future, are excited. There is a sense that big things are about to happen - not just in heavy industry - and yes, according to Mayor Lyn Breuer, her hairdresser says people are starting to get their hair cut again.
It’s an indication, she says, that people have confidence about their future, and families that were unsure whether they’d have someone bringing in a pay cheque in the future, are now confident enough to splurge a little on themselves.
Ms Breuer, Whyalla born and bred, says people have a spring in their step.
“Morale has picked up. We’re still recovering ... business is starting to pick up and people’s confidence is starting to pick up, but we still have quite a number of families that were drastically affected by what happened and became sole-income families.
“But the feeling I get is that with the announcements that keep coming one after the other, people are starting to realise that our world has changed.
“For example I went to the local hairdresser recently and she said ‘people are starting to get their hair done again’, where before they were only doing it when they had to.’’
“Retail is picking up a bit and real estate is picking up again too.’’
Ms Breuer said GFG had been good at keeping the council abreast of its plans, and the company intended to brief the council at meetings regularly from now on.
“They realise that they do have to get the message out to the community now.’’
One community member who has seen a big impact is Barbara Derham, who owns the Foreshore Motor Inn at Whyalla with husband Tom. It’s safe to say she’s a big fan of Mr Gupta.
Ms Derham, who also heads up a Whyalla tourism business leaders group, said there had been a “significant” increase in business in the tourism sector.
Personally, her business plays host to Mr Gupta when he is in town, and there’s a steady stream of engineers and other consultants coming through as the big plans to redevelop the steelworks and port are thrashed out.
Ms Derham said naturally some people were sceptical about when the big dollars would begin to be spent, but she saw the amount of room nights being booked in the accommodation sector, and not just by GFG, as a leading indicator for the health of the economy.
As for Mr Gupta personally, Ms Derham says “he’s a delight to look after, and a very approachable person’’.
“And he seems very community minded.’’
Ms Derham said Mr Gupta was humble and very friendly, spending time to regularly chat with local businesspeople.
“I think Whyalla’s very fortunate to have him interested in the infrastructure here.
“Some people are saying ‘when’s it going to happen’, but I say, ‘goodness me, the smoke’s coming out and everyone’s still going to work’.’’
Hadyn Shepherd, Bis general manager for site services SA, says the company is looking forward to brighter times.
Bis employs about 200 people in Whyalla and has been involved in the city for 60 years.
“We are also supported by approximately 70 different local suppliers to provide materials handling services to GFG Alliance in Whyalla,’’ Mr Shepherd says.
“Without a doubt, the increase in confidence is the biggest thing we’ve seen. It has made a significant positive difference.
“The whole Whyalla community was extremely anxious when Arrium went into administration. Bis was a major supplier to the previous owner and as such we were a member of the Arrium Creditors Committee, which worked constructively to ensure the operations continued under new ownership.
“The new ownership, in the form of GFG, is reinvigorating the business and has provided renewed hope and optimism to the local community.’’
Bis is keenly watching GFG’s plans, and so far has been impressed with what it sees.
“Whyalla is enjoying renewed confidence and optimism and the town is united as one to work with GFG Alliance to secure the future for the company, employees, contractors and our community,’’ Mr Shepherd said.
“They are true ambassadors of their family values and genuinely care for their people and their families.’’
There’s not a total dollar figure on the record for GFG’s plans in Whyalla and beyond, but it’s safe to say the figure is well into the billions.
And Mr Gupta, who moved to Sydney after the acquisition to be able to more closely manage his Australian assets, has continued to carry out a seemingly insatiable acquisition schedule globally, buying up coal mines in New South Wales, wavepower and pumped hydro companies, and other industrial operations to add to the 14,000 global employees he already has. The question on any sceptic’s lips is, “is it too good to be true?”
It’s a question The Advertiser put to Mr Gupta in Adelaide recently.
His answer speaks for itself.
“The proof is in the eating of the pudding. All of our plants abroad, all of them are making money, all of them are turned around,’’ he said.
“It’s natural for people to be sceptical, because these industries have failed one after another, and we are buying them and turning them around, so it looks like some sort of miraculous activity, but it’s not. It’s just belief and looking at it whether there is a fundamental market, looking at what resources you have, how best you can apply them.
“There have been many times in history when people have come along and changed the way things are done and made them sustainable but they have always been greeted with scepticism so it’s not something I’m unfamiliar with.’’
History will be the judge of Mr Gupta’s grand ambition. But for Whyalla, for now, the future is bright.
cameron.england@news.com.au