GFG Alliance owes ‘tens of millions’ in royalties and bills to SA businesses over Whyalla steelworks, Peter Malinauskas confirms

Unpaid royalties, unpaid contractors and Whyalla steelworks’ financial problems are keeping the SA Premier awake at night.

GFG Alliance owes royalties “in the tens of millions” of dollars to the state government. picture: Bianca De Marchi

GFG Alliance owes royalties “in the tens of millions” of dollars to the state government and the Whyalla steelworks owner is the only South Australian mining and energy company failing to pay its bill.

Premier Peter Malinauskas also confirmed in state parliament on Wednesday that money owed to contractors outside of government was in the “tens of millions” according to GFG Alliance information supplied to the state’s Steel Taskforce.

The disaster now unfolding in Whyalla is imperiling the Premier’s $593m hydrogen plant.

“Certainly we are aware that the money that’s owed by GFG outside of the monies owed to the South Australian government is in the order of tens of millions of dollars,” Mr Malinauskas said.

Treasurer Stephen Mulligan said expected royalty payments were not received last week and the company was in arrears by six months, confirming he was unaware of any other companies failing to pay their SA royalties.

Mr Malinauskas said earlier in the day that financial challenges facing the Whyalla steelworks were keeping him awake at night, later telling parliament that he was attending meetings “two or three times a day” around the financial challenges facing GFG Alliance.

This included one as recent as that morning.

The government also “has been engaged with other companies” in a process started last year, to discuss opportunities in the Upper Spencer Gulf, he said.

GFG Alliance owes royalties “in the tens of millions” of dollars to the state government. Picture: Ben Clark.

Mr Malinauskas told parliament GFG Alliance also owed money to SA Water, but he understood fees like its payroll tax were up to date.

Ongoing meetings between Mr Malinauskas with steelworks’ workers along with worker representatives including the Australian Workers’ Union earlier this week, informed him that workers at the company were being paid salaries including their superannuation.

His comments came after news emerged earlier this week of the government’s “grave concern” about the financial challenges facing GFG Alliance along with its ability to fund the steelworks’ future.

The Premier said the steelworks had created a policy challenge for the “state and the country”.

On Wednesday, Mr Malinauskas again raised concerns about numerous contractors and businesses not being paid.

“We are concerned about the royalties, we are concerned about the money that’s owed to the South Australian community, but we’re even more concerned about the money owed to contractors on the ground,” he said.

Despite the financial challenges, Mr Malinauskas confirmed that money remained budgeted for the government’s flagship $593m hydrogen project in the Upper Spencer Gulf that aimed to supply power to help GFG Alliance create green steel in Whyalla.

However, Mr Malinauskas said it was important to have a strong customer and the nation could not reach set emission reduction targets without a project to “decarbonise steel”.

He said the state’s prosperity plan was not contingent on GFG Alliance chief Sanjeev Gupta “but of course the steelworks we see as a critical piece of infrastructure for the state of South Australia”.

The government saw itself as an important custodian of the Upper Spencer Gulf resource, he said, and “that’s why we care about who owns it very much”.

Opposition leader Vincent Tarzia was concerned that the government appeared to have had a “change in tone” in pursuing its hydrogen plan “seemingly now blaming GFG for its own delays and broken promises”.

“Peter Malinauskas promised to build a hydrogen plant and assured South Australian

households that they would be better off – now, almost four years later, nothing has

changed,” Mr Tarzia said.

Originally published as GFG Alliance owes ‘tens of millions’ in royalties and bills to SA businesses over Whyalla steelworks, Peter Malinauskas confirms