Sanjeev Gupta’s GFG Alliance is talking to Japanese investors about Whyalla steelworks plans

Sanjeev Gupta’s GFG Alliance is in talks with Japanese investors about funding its expansion plans at the Whyalla steelworks, as global capital seeks out greener steel options.

GFG Alliance executive chairman Sanjeev Gupta at the Whyalla steelworks.

Sanjeev Gupta’s GFG Alliance is in talks with Japanese investors about funding its expansion plans at the Whyalla steelworks, as global capital seeks out greener steel options.

Theuns Victor, who heads up GFG’s Liberty Primary Metals arm, spoke at the Connecting Green Hydrogen conference in Japan this week, as the company advances talks about co-funding options for the expansion of the steelworks, which is in the process of phasing out coal use.

The Whyalla steelworks shut down its coke ovens last month, exactly 55 years and 55 days after they completed their first “push” in 1968, as the operation prepares to move to electric steelmaking.

The ambition eventually is to create what the company is calling Greensteel, using hydrogen from the planned hydrogen precinct being developed by the South Australian government on land not far from the steelworks.

Mr Gupta announced in April that a contract had been signed for an electric arc furnace for Whyalla, to replace the coke-fuelled blast furnace.

At the time of that announcement Mr Gupta said it was a $500m commitment, which would reduce carbon emissions from steelmaking by 90 per cent.

GFG also plans to build a new direct reduction plant (DRP) at Whyalla, which would convert locally-sourced magnetite iron ore to the feedstock needed to supply the new furnace.

That will require new capital, and Mr Gupta has also said GFG would look at the viability of developing its own hydrogen solutions as well as alternative power sources, given the huge power needs of electric steelmaking.

The plan is for coal-based steelmaking at Whyalla to be phased out by 2025, with Italian company Danieli contracted to supply the electric arc furnace, which would also increase steelmaking capacity from one million tonnes per year to 1.5 million.

The business case for the DRP was forecast to be finished by the end of this calendar year, which puts the timing for that project about a year behind the electric arc furnace.

Japanese investors are understood to be keen to talk with GFG, given their desire for exposure to greener steelmaking operations.

Potential deals around offtake agreements and investments in the operations are being canvassed, the company confirmed on Wednesday.

Mr Gupta is a strong proponent of the development of a hydrogen industry, but has on numerous occasions voiced his scepticism that hydrogen exports will be economically viable, meaning that the gas will need to be used at or near where it is made.

The SA government’s $593m hydrogen hub at Whyalla is expected to built and in production by the end of 2025, and is promised to be the largest hydrogen electrolyser facility in the world.

Liberty Primary Metals recently paid off the last of the $430m in refinancing put in place to keep the Australian operations going following the collapse of Greensill Capital in 2021, which left GFG scrambling to refinance almost $6bn globally.

Liberty Primary Metals Australia is yet to file its full year accounts with the corporate regulator for the most recent financial year.

It booked a $434.2m profit for the 12 months to June 30, 2022, helped by surging coal revenues from its Tahmoor colliery south of Sydney, where income rose 30 per cent.

The company posted $3.1bn in revenue, with steel sales delivering 43.3 per cent of that, or $1.35bn – up 40 per cent on the previous year. Sales of iron ore from its SA mines delivered another $950.8m in revenue, down from $1.15bn the previous year.

Originally published as Sanjeev Gupta’s GFG Alliance is talking to Japanese investors about Whyalla steelworks plans