Whyalla Steelworks was losing $1.5m a day, owes $1.35bn creditors told

Whyalla Steelworks was losing an estimated $1.5m every day and there are $1.3bn in claimed debts being assessed, creditors have been told.

• Relief for Whyalla as creditors roll in

Whyalla Steelworks and mines was losing an estimated $1.5m every day and there are $1.3bn in claimed debts being assessed, creditors were told by OneSteel Manufacturing administrators KordaMentha at a meeting today.

When the administrators took over the GFG Alliance subsidiary on February 19, maintenance at the steelworks had been wound down so much that key traffic lights near the steelworks were not operating, they told the first creditors’ meeting at Whyalla’s Westland Hotel Motel.

KordaMentha was told by staff that they had “started to rely on luck for safety” and the company was relying on “the resilience of employees and contractors” to continue operating.

The meeting of almost 500 people chaired by KordaMentha joint administrator Lara Wiggins was told that since then money has been flowing to pay contractors including a first staff payroll processed last week.

Whyalla Steelworks and mines was losing an estimated $1.5m every day and there are $1.3bn in claimed debts being assessed, creditors were told on Monday. Picture: Dean Martin

The traffic lights were now fixed, Whyalla Port was also operating as money flowed to unpaid contractors operating the vital infrastructure.

GFG Alliance headed by Sanjeev Gupta and its subsidiaries are claiming to be the highest creditors of OneSteel with $567m however the administrators said that these debts were being considered as “disputed” at this stage.

GFG Alliance and Sanjeev Gupta submitted a statement read at the meeting that claimed its subsidiary OneSteel Manufacturing had been impacted by the shut down of the steelworks’ blast furnace and other operational matters.

Mr Gupta also partially blamed his group’s financial woes on the heightened level of media coverage his business dealings had garnered.

The statement claimed OneSteel Manufacturing had a “back to life plan” in place with the program working to “break even by the middle of 2025” but it had not continued after the state government pushed the company into administration over unpaid SA Water and royalties bills.

The statement committed GFG Alliance and its subsidiaries to working with the administrators.

A statement read at Monday’s meeting claimed OneSteel Manufacturing had been impacted by the shut down of the steelworks’ blast furnace, and other operational matters. Picture: GFG Alliance/Brenton Edwards

Joint KordaMentha administrator Sebastian Hams said operations were getting back on track at the steelworks, mines and port and “We’ve been issuing purchase orders for a week now”.

He said the business had about $8m in operating cash when KordaMentha took over, not enough to cover payroll, that there had been insufficient money spent on the plant and “the business is running on empty”.

A representative of GFG Alliance that previously operated its subsidiary OneSteel Manufacturing attended the meeting online but GFG Alliance Sanjeev Gupta did not attend.

There were about 150 people attending in person including Premier Peter Malinauskas and 330 virtually.

Premier Peter Malinauskas was in Whyalla for the meeting. Pictured with David Bruce from Whyalla Hose and Fitting Services. Picture: Brett Hartwig

The meeting was told there were three top tier secured creditors – the SA state government, GFG Alliance’s associated entities and other secured creditors “that have various agreements over prepayments”.

Priority creditors included 1,487 employee entitlements. Those creditors based in SA and Whyalla can access state government support but other Australian creditors have to rely on returns from the administration.

The meeting voted to back the administrators’ pick to have BlueScope take an advisory role in managing operations, as it focused on stabilising operations and finding a buyer.

Mr Malinauskas earlier in the day spelled out that the state and federal governments “have a seat at the table” in KordaMentha’s search for a new owner of the ailing steelworks and mines.

Originally published as Whyalla Steelworks was losing $1.5m a day, owes $1.35bn creditors told