It would be best for everyone involved if the Whyalla steelworks was owned by someone else

Sanjeev Gupta’s parting gift to South Australia should be gracefully finding a new owner for the Whyalla steelworks.

British industrialist Sanjeev Gupta at the Whyalla steelworks in 2017.

Arguably the best outcome for Whyalla at this stage of the GFG Alliance fiasco is for the entity that owns the steelworks to put itself into administration, thereby kicking off a bidding contest between our political leaders for who can promise the most to save the steel city.

The fact that a politician’s pre-election promises now carry much more weight than anything Mr Gupta has to say about the future of the steelworks speaks ­volumes.

But sadly it’s true.

There was disquiet within the higher ranks of South Australia’s Labor government when Mr Gupta edged out Korean mega-conglomerate Posco – the leading bidder – to buy the company out of administration after it failed under the leadership of listed firm Arrium.

Mr Gupta turned the marketing dial up to 11 in late December 2018 when he announced a series of massive investments at a “Big Reveal” in Whyalla, attended by then-prime minister Scott Morrison and opposition leader Bill Shorten.

But $1bn or so worth of initial promises were just the start. Plans for renewable energy programs generating multiples of South Australia’s usual demand, a copper smelter, a bank, and even bringing car manufacturing back to the state were floated in public forums.

While there were plenty of murmurings of “is this all for real?” behind (some) closed doors, he won support from some of the nation’s business elite, buying into major renewables company Zen Energy which counts Ross Garnaut as a shareholder and director (Mr Gupta is no longer a shareholder).

And his $34m purchase of the Sydney harbour-side mansion Bomera provided the perfect venue to entertain in the manner to which the white knight in waiting for Australia’s heavy manufacturing industry is apparently accustomed.

Mr Gupta’s mansion, Bomera, at Potts Point.

As it turns out, GFG Alliance, and subsidiary Liberty Primary Metals Australia which owns the steelworks, were not even able to pull off the construction of a solar farm next to the steelworks, let alone launch a global green steel revolution.

If you take him at his word, Mr Gupta has propped up the steelworks to the tune of hundreds of millions of dollars just to keep it operating over the past 18 months or so as it has plunged into the financial red, not helped by two lengthy outages over the past year.

But given his past record, it’s pretty difficult to take Mr Gupta at his word.

The company coyly included a major slippage in the timeline for a new electric arc furnace – from 2025 to 2027 – in a nondescript press release last May.

To be clear, the arc furnace was meant to be up and running this year, and that itself was a delay from the initial proposal for a 12-month feasibility process and a three year build announced way back in 2018.

By October last year the pretence of a deadline for the arc furnace had evaporated, with Mr Gupta by then saying the plans were dependent on locking in new gas supplies to the steelworks – a process which would take years in itself.

The steelworks was offline for a significant period last year.

And while Mr Gupta is confident backers will be lining up to fund his green steel ambitions, the company is still yet to seal $150m in debt funding – which it arguably needs just to keep the lights on which was meant to be signed, sealed and delivered by the end of last year.

Mr Gupta’s ambitions were certainly thrown into disarray by the collapse of his financier Greensill.

However, GFG’s own huge indebtedness to that firm was pivotal in that collapse.

Mr Gupta talks a good game, but whatever he says now, the facts are clear that his empire faces an existential challenge.

There are legal challenges on several fronts, including a $US52.8m ($84.2m) judgment handed down against one of his group companies in London just last month, in a matter in which GFG argued it couldn’t afford a lawyer.

But the Whyalla steelworks cannot be allowed to fail on several national interest grounds.

While it seems unlikely the company’s major creditors, including the South Australian state government, are inclined to tip it into administration at this point – the government would be crazy to do this, from a political standpoint – a voluntary administration would likely be a good outcome.

A new owner could then emerge, likely bearing a fistful of our taxpayer dollars, and ensure that a Whyalla wipeout is taken off the table.

Originally published as It would be best for everyone involved if the Whyalla steelworks was owned by someone else