Whyalla plunged back into uncertainty due to Sanjeev Gupta crisis but residents vow to fight on

Whyalla has been plunged back into uncertainty with news the town’s saviour, Sanjeev Gupta, is in trouble. But locals remain optimistic the city will fight on.

Whyalla has been here before. Too many times.

The threat that the town is doomed. That the steelworks, the city’s lifeblood, is in trouble. Whyalla is again a town holding its breath to see what happens next.

The people of Whyalla are not, though, in the mood to give up.

But there is a mix of fatalism, optimism, pessimism maybe even some antagonism as Whyalla braces for whatever is next.

You hear phrases such as “resilient” and “battle hardened’’ and there is no doubt a desire to fight.

Sanjeev Gupta, hailed as the town’s saviour not that long ago, is in trouble.

Whatever mind-bendingly complex financial arrangements he entered into with the now- defunct Greensill Capital are too hard to understand for most, but the bottom line, the hard floor of the equation is that the future of the Whyalla steelworks and mine are again uncertain.

Adding to the pain this time around is that it seemed the boom-bust cycle of Whyalla was a thing of the past.

A certain certainty had made its way to Whyalla. It was prospering. House prices which had plunged after Arrium fell into administration in 2016 had bounced back.

Now people are trying to remain positive, but some nerves are easy to detect.

Alex Manners, a 28-year-old father of two says, so far “it’s business as usual, we have been flat out’’.

Manners is a rigger who works for a crane contractor at the mine and was an apprentice when Arrium controlled the steelworks, says those days haven’t been forgotten.

“Arrium’s administration is still fresh in everyone’s mind and we are just starting to get over it,’’ he says.

Mine worker Alex Manners with four-year-old daughter Lila on Hummock Hill in Whyalla. Picture: Tom Huntley

But, Manners says the mood of the town has been positive until the last couple of weeks.

Like many others he talks about the rebound in the city’s real estate market to illustrate the point.

“In town, when houses go up for sale, within a week there is a ‘sold’ sign on it.’’

In the city centre, down Darling Terrace and up Patterson St, business owners aren’t panicking.

There’s a feeling there is still a long way to go before this thing is resolved one way or the other. But there is a sense that again they are being dragged into a situation that is not of their making.

Florist Penny Alboini, owner of Exquisite Flowers by Penny, ruefully wonders whether the $25,000 she and her husband have just spent on installing a new solar system will be wasted if house prices dive again.

“It’s like, here we go again,’’ she says.

Part of the problem this time around, Alboini says, is the lack of information.

“They are not really telling us anything, it’s all a bit secret squirrel,’’ she says.

“The average person is probably a bit confused and worried.’’

Exquisite Flowers by Penny owner Penny Alboino. Picture: Tom Huntley

Around town, almost everyone talks about how GFG is slow in paying its contractors, although this week Small Business Commissioner John Chapman said the company appeared to be paying suppliers on time.

Andrea Carter has owned One Stop Carpets on Patterson St for 26 years and says Gupta is “a bit like the Royal family, you either like him or you don’t.’’

But Carter also understands without Gupta’s intervention in 2018, life in Whyalla could be very different.

“If it wasn’t for him it would have been lights out (for the steelworks), no one else took it on, no one else had the courage to do it.’’

So Whyalla waits to see what is next. Not far from One Stop Carpets, Wes Fisher at U-Pedal Cycles believes people are already being a bit more careful with their money.

“The last week and a half has been pretty slow,’’ he says. “A few people here will be losing sleep.’’

Still, there is a feeling that the steelworks are just too big to fail. Amid the Turkish delights and vegan raw cookie balls at the Whisk Away café, owner Elpida Vlachoulis is upbeat.

“I believe he will find another backer and will be fine,’’ she says.

“We are a resilient town and we will be OK.’’

Whisk Away owner Elpida Vlachoulis. Picture: Tom Huntley

Eddie Hughes is the local Labor MP.

Part of his working life was spent as a steel deseamer at the steelworks. His parents worked there. His son as well.

He estimates around 25 per cent of town depends on the steelworks and mine for direct employment.

“It is the beating heart of this economy and this community,’’ he says.

Hughes says he is “cautiously optimistic’’ but says the outcome may not be known for some time yet.

Whatever happens with Gupta though, Hughes says it’s imperative Australia retains the capacity to make steel and the workers are looked after.

“Australian workers should not be sacrificed on the altar of complex financial arrangements overseas,’’ he says. “

There is some ambivalence to Gupta himself.

A feeling that he has not delivered on all his promises and is now not likely to.

In the year or so following Sanjeev Gupta’s purchase of the Whyalla steelworks, it seemed the British industrialist’s vision for his South Australian assets grew with each passing month.

Even before Gupta’s “Big Reveal” at Whyalla in late 2018, where the potential for a steelworks multiples the size of the existing asset were floated, the ideas had come thick and fast.

A billion US dollars worth of renewable energy – just for starters – in the form of huge arrays of solar panels, pumped hydro and batteries, could power the steel mill, but also perhaps a copper smelter in the Upper Spencer Gulf.

P Gupta , Prime Minister Scott Morrison and Premier of South Australia Steven Marshall . Picture: Tom Huntley

There were talks of setting up a bank for large, medium sized businesses, speculation – not denied – that Gupta’s company GFG Alliance could buy the Nyrstar zinc and lead smelter at Port Pirie, electric cars, built in Australia, were on the cards, and eventually, new housing developments in Whyalla to house the inevitable flow of people, boosting the city’s population

fourfold to 80,000.

The ideas all made sense. They still do. Across most economies there is an inexorable move towards renewable power, and, with enough of it, more value-adding by turning Australia’s copper and iron ore into end products becomes viable, and even lucrative.

But the numbers attached to such projects were always, by dint of their size, in the billions, and the question has always been – is it too good to be true, and who will pay for it?

The first question will remains unanswered for now. But the questions of how would it all be paid for has become apparent in dramatic fashion in the past week or so, as the global fortunes of GFG’s global financier, Greensill Capital, have spectacularly unravelled.

Greensill, headed by Bundaberg-born Lex Greensill, appears to have been the secret sauce which allowed Mr Gupta’s empire to rapidly expand, to the point where it now says it employs 35,000 people across the globe.

The assets are numerous, spanning energy production, mining, advanced manufacturing, and steelmaking.

But Greensill, once worth an estimated $7bn, put itself into administration this week, after its main insurer cut a $4.6bn policy, triggering Credit Suisse to wind down $US10bn in funds invested in loans arranged by Greensill.

The fate of Greensill, now lies with the administrators, and how its failure affects GFG is likely, in the words of Australian Workers Union SA branch secretary Peter Lamps, is likely to play out “over a number of weeks rather than days’’.

But while there is fervent speculation in the world of high finance globally about what will happen next, in Whyalla, while there is concern, no one is writing the city off just yet.

From the Foreshore Motor Inn where Barbara Derham had a full house this week, the view, and the outlook, are positive.

The city’s new jetty – an innovative design with a circular amidships – sits just out the front, a new attraction for the tourists which are rediscovering Whyalla – there’s a new $100 million high school under construction in the centre of town, and at the steelworks itself, there is now ore going out from third party companies such as copper miner OZ Minerals, providing more economic certainty for that asset.

The new circular jetty in Whyalla. Picture: Tom Huntley

Derham, whose property is part of a planned development including a nine story hotel, has no time for negativity around Whyalla’s future, and says other tourism operators are also having a boom time.

“I’m a business person who’s been here over 40 years and I’m very positive about GFG,’’ she says.

“We’ve been here a long time and we’ve never been busier. As far as the tourism economy here, it’s never been busier.

“Whyalla is fine. GFG, from the information that has been given to businesses, is profitable at the moment.’’

Derham is correct. GFG has been calmly reiterating this week that the Whyalla steelworks – once beleaguered – are now profitable after unspecified investments and a lot of effort on GFG’s, and local workers’, behalf.

And there is a sense, although no one is too keen to countenance the notion out loud, that should the worst eventuate for GFG globally, Whyalla’s steelworks, port and iron ore mines will pull through.

As Hughes says. “We are still here. This is a battle-hardened community, we have faced challenges before and got through them and we will face this challenge and come through it.’’