Aurizon suspends some rail haulage at GFG Alliance’s iron ore operations over contractual issues
Rail operator Aurizon has suspended some services to GFG Alliance’s Whyalla operations, just days after GFG head Sanjeev Gupta reiterated his commitment to returning to profitability.
Rail operator Aurizon has suspended some services to GFG Alliance’s Whyalla operations, just days after GFG head Sanjeev Gupta reiterated his commitment to returning the steelworks and iron ore mines to profitability.
The heavy haulage company transports iron ore for Liberty Primary Metals Australia, the GFG subsidiary which owns the Whyalla steelworks and iron ore mines in the Middleback Ranges.
Aurizon said in a statement it was working through the situation with GFG, but had suspended “some” operations.
“Aurizon is in discussions with one of our customers regarding unresolved contractual issues,’’ the company said.
“We have endeavoured to find a suitable way forward; however, Aurizon has now suspended some rail haulage services to the customer until these issues are resolved.
“This will impact Aurizon’s operations and the work our employees do for the customer. We continue to work through these potential impacts with our employees.’’
GFG told The Australian: “We continue to work constructively with our suppliers to manage through the current market downturn impacting the steel industry.”
Mr Gupta told The Australian on Tuesday this week that the Whyalla operations were losing about $1m a day at the moment, but there was a plan to bring them back to profitability.
The blast furnace at the steelworks is currently out of operation - for the second time this year - with Mr Gupta saying it would be back online and producing steel in “days” or “weeks”, but definitely not months.
Mr Gupta downplayed the seriousness of reports that the company was paying suppliers late, saying that while it had been paying some larger suppliers late, the situation was being worked through.
Mr Gupta said on Tuesday that in terms of payments to suppliers, there had been some delays and issues, “but they’re all being handled’’.
“We’re working in partnership with them, there’s been good resolutions, and we’re working in lock-step with them in terms of how we move forward, and they are all supporting and continuing. There’s no fundamental issue.’’
Mr Gupta confirmed the company also remained behind on its royalty payments to the State Government.
The blast furnace at Whyalla was out of action from mid-March until June, with damage to its shell delaying it coming back into production when it was being restarted.
The blast furnace went offline again in mid-September when unwanted materials were introduced into it and is yet to come back online.
LPMA cut 50 white collar jobs earlier this year and another 100 or so were to go across the mining division in a staged process over recent months.
Mr Gupta’s plans to convert the steelworks to a green steel operation, which would involve likely more than $1bn in new investment in a new direct reduced iron plant and electric arc furnace, are in abeyance until a commitment is made for increased natural gas suppliers to Whyalla.
Without more gas, or hydrogen, there is not enough energy to power the new infrastructure.