About 50 jobs have been axed at GFG’s embattled Whyalla steelworks

GFG Alliance has cut about 50 jobs at its embattled Whyalla steelworks as rumours mount of late payments from Sanjeev Gupta’s global conglomerate.

Steelmaking operations at the Whyalla Steelworks.

GFG Alliance has cut about 50 jobs at its embattled Whyalla steelworks as rumours mount of late payments from Sanjeev Gupta’s global conglomerate.

The company confirmed on Thursday that it had let go an unspecified number of staff, understood to be about 50, with the blame sheeted home to poor conditions in global steel markets.

Contractors have also been complaining, anonymously, of late payments from the company, which was forced to shut down steelmaking at Whyalla from mid-March to early July after its blast furnace was damaged.

A GFG spokesman said on Thursday that the company was looking at cost reductions, but there would be no effect on the steelmaking operations.

“Due to a prolonged downturn in steel market conditions globally we are taking efficiency steps to reduce our fixed costs,’’ they said. “That will result in a small number of non-frontline staff adjustments.

“We are working with those affected to ensure they are supported throughout the process. These measures do not affect our steelmaking or commitment to transition to green iron and steel.”

The company said it was working with its suppliers.

“Our Whyalla operations have endured difficult times before and GFG Alliance remains committed to its long-term future and transformation to green iron and steel,’’ the spokesman said.

“We are working through this downturn with our employees and contractors.”

Sources have told The Australian that some contractors had been forced to threaten to withhold services before being paid, with the situation worsening over the past six months.

GFG Alliance, headed by executive chairman Sanjeev Gupta, bought the steelworks out of administration in 2017, with plans to spend billions of dollars on expanding the steelworks and many other ambitious projects in South Australia in renewable energy and manufacturing.

This has not come to pass, beyond capital expenditure at the current steelworks, but the company is still planning to build an electric arc furnace and integrated direct reduced iron plant at Whyalla, at a cost previously estimated at $500m.

The company in May pushed the timeline for that project back from 2025 to 2027, citing the complexity of delivering both projects at once – and infuriating the state government which had been left out of the loop.

The federal government has committed a $63.2m grant towards that project as part of its push to help Australian industries decarbonise, but that payment is contingent on its completion.

The earnings of Liberty Primary Metals Australia, the GFG subsidiary which operates the steelworks, are no doubt under pressure given the steelworks’ extended shutdown this calendar year.

The blast furnace went cold in mid-March during routine maintenance, and its restart was delayed following damage to its shell during efforts to get hot steel flowing again.

LPMA’s profit came in at $143.2m last financial year, down from a $434.3m profit the previous year.

GFG almost collapsed in recent years after its lender, Greensill failed in 2021.

Mr Gupta had gone on a buying spree, buying distressed assets globally, but his companies’ non-performance on a number of fronts has resulted in calls from trade unions in Europe to have him ejected from the industry in some countries.

In May trade union umbrella bodies industriAll Europe and IndustriALL Global Union, which claim to represent millions of workers in mining, energy and manufacturing across Europe and worldwide, called “for an end to Mr Gupta’s irresponsible management which is putting Europe’s strategic steel production at risk’’.The unions claim several blast furnaces have been idled, with production capacity at a “dramatically low level’’.

Despite its difficulties, Liberty Primary Metals Australia has been among the best performers in the GFG stable.

It turned a profit of $143.2m last financial year, albeit down from a $434.3m profit the previous year. The impact of a months-long shutdown of the Whyalla blast furnace on the bottom line remains to be seen.

Originally published as About 50 jobs have been axed at GFG’s embattled Whyalla steelworks