From giant batteries to a new bank — what’s happened to Sanjeev Gupta’s grand plans?
Whyalla ‘saviour’ Sanjeev Gupta has had some grand plans over the past few years, from giant batteries to a new bank – so what’s happened?
When the then little-known British industrialist Sanjeev Gupta came from behind to win the pitch to buy — and save — the Whyalla steelworks, he came with a promise to not only keep the operations running, but to make significant investments to make it future-proof.
The initial pitch was for $US1bn ($1.29bn) in investments across the steelworks and associated mining businesses to modernise and expand the plant, expand the product mix and improve energy use.
GFG was also already flagging that bigger things were in store: the potential for much bigger renewable energy investments, pumped hydropower plans, and better utilisation of arc furnaces across Melbourne, Sydney and Newcastle.
As the months and then years rolled on, the plans came thick and fast, and became ever more ambitious, with the dollar figures growing also.
A “big reveal” was held at Whyalla in December 2018, with the audience including Prime Minister Scott Morrison and then-opposition leader Bill Shorten, where plans were announced to not just upgrade the current steel mill, but possibly build a new, massive, world-class mill alongside the current facility.
It was heady stuff. And yet aside from upgrades to the steelworks, which GFG says has finally returned it to profitability after many years of underperformance, most, if not all, of these plans remain on the drawing board.
This week, two of those plans went from the drawing board to the sale block, with GFG announcing it was looking at selling or partnering on its Cultana solar and Playford battery projects.
With GFG’s major financier Greensill in administration, and the company racing to refinance billions in debt globally, its grand ambitions seem to have taken a back seat to survival concerns.
Mr Gupta’s firm made a welcome forward step this week towards keeping at least the Australian operations afloat, with a refinancing of its Australian debt to Greensill with US-based White Oak Global Advisors.
But with the announced review and likely sale of the energy projects — the first of what were supposed to be enormous plans — it seems the appetite for expansion has cooled dramatically.
News Corp Australia takes a look at some of the plans announced over the past few years:
10GW of combined energy production and storage nationally
To put this into context, according to the Australian Energy Regulator, Australia’s entire installed power generation capacity is about 51GW. Mr Gupta originally announced 1GW of energy plans, with the cornerstone being the 280MW Cultana project just outside of Whyalla, which was to house 780,000 solar panels. The 100MW Playford battery, which was to rival the size of the Tesla battery at Jamestown in South Australia, was also announced early on. The 10GW aspirations, announced at an energy conference in May 2018, brought together ideas such as using disused iron ore mines for pumped hydro projects, where energy would be used to pump water uphill, to be used to generate energy when it was needed. Installing solar across 200 GFG sites and doing deals with employees to put solar and batteries on their own homes was also part of the idea. So far, none of these grand ambitions have come to fruition, with the Cultana project currently consisting of a small test rig, although it is fully approved, GFG says. The Playford battery is well advanced on the planning front, and a site near Port Augusta has been secured, but it also is at the early stage.
Massive new steelworks
A feasibility study on a massive new steelworks, to sit alongside the existing plant, with a maximum capacity of 10 million tonnes was announced in 2018. These plans evolved over time, as Mr Gupta’s Greensteel ambitions to make carbon-neutral steel, also evolved. The revised plans were for an electric arc furnace and a new direct reduced iron facility initially powered by gas, and then eventually renewably-produced hydrogen, as well as a new steel mill. Mr Gupta said in December the mill was “very well developed; the EAF is also quite developed; and the DRI we’re completing a lot of engineering work now’’.
Building a copper smelter in the Upper Spencer Gulf
Also in May 2018, Mr Gupta revealed the company was looking at setting up a copper smelter and refinery in the region. Mr Gupta said at the time he had spoken to “all the major players” in the copper sector in South Australia about the potential for a smelter, and feasibility studies were under way. With copper mined at the Olympic Dam, Carrapateena and Prominent Hill mines, with most of the ore exported for smelting over seas, the idea makes sense, should a large source of cheap energy be available. The progress of the copper plans is unclear at this stage.
Manufacturing electric vehicles in Adelaide
Mr Gupta in 2018 approached General Motors Holden to buy assets from its closed Elizabeth factory. At the time, then Labor treasurer Tom Koutsantonis wrote to the carmaker saying that GFG Alliance “intend to develop the site as a manufacturing base for an electric vehicle, using the innovative iStream technology”. GFG’s business partner Pelligra had already bought the site and has been developing it for a number of industrial uses since. Mr Gupta told News Corp Australia in April 2019 plans would be unveiled “in the next few months”.
“We’re committed to launching an EV platform in Australia. We’re working very hard on a couple of options and we hope to announce more detail on that very soon,” he said.
“We’ll definitely be launching a car within this year.”
GFG said the flexibility of the iStream manufacturing process and the simplicity of EVs made break-even possible at 10,000-15,000 units, with the eventual target about 30,000 a year across a range of models. These plans have not come to fruition.
Setting up a bank to cater for companies in the $50m-$500m turnover range
This bank was to cater for mid-market businesses that were under-served by current operators, and GFG said it was looking to acquire a local business as the cornerstone of its banking ambitions. GFG had done a similar deal over what was rebranded as Wyelands Bank in the UK. The banking plans are yet to be realised.
New housing developments in Whyalla
This was going to be a longer-term plan, and was about making Whyalla a great place to live and work. Mr Gupta said in 2018 part of his job was to “make Whyalla a place where people want to come and live, come and visit’’.
“And we have various things planned and slowly over time we’ll unravel those. I’m very excited about seeing Whyalla become an exciting, vibrant place.’’
Refurbishing the Whyalla steelworks
The initial figure touted to be put into the existing steelworks was $600m, and while an exact figure of what has been spent to date has not been released, this is a success story, with an “expert group” assembled by GFG, along with the efforts of the local workers, bringing the facility back to profitability this year. Mr Gupta said late last year the current blast furnace built in 1965, has in recent years been the “poor cousin’’ of the business, but the team had “not only able to address that issue, but undertake that turnaround’’.
Rumoured interest in assets
With the Nyrstar polymetallic smelter in Port Pirie running into difficult times in late 2018, the question was posed to Mr Gupta as to whether he’d be interested in buying it. He didn’t squelch the rumours, playing a straight bat when asked. He said has a policy of not commenting on speculation and issues that “shouldn’t really be talked about in public unless they become reality”.
In late 2019, Mr Gupta was also reported as being in the running to buy Victoria’s Portland aluminium smelter. At the time there were concerns the Portland smelter would be slowed, with owner Alcoa flagging a global review of some of its costly and high carbon-emission plants. The plant was eventually thrown a $150m lifeline by the federal and state governments allowing it to keep operating until at least 2026.
GFG also made a $100m bid to earn up to a 51 per cent stake in Adelaide company Havilah Resources, with an eye to helping develop the smaller company’s iron ore and copper assets. That bid was rejected by Havilah shareholders.
GFG said in a statement that it had worked hard to get the Whyalla operations back to a profitable footing.
“Since buying the Whyalla operations in 2017 at a time when their futures were at risk, we’ve invested hundreds of millions of dollars to return the business to profitability, save jobs and continue to contribute to the local economy and community,’’ a spokesperson said.
“While we are taking practical steps to manage the challenges presented by the collapse of our major lender, this week we made significant progress by agreeing to terms to refinance the mining and primary steel business.
“We remain committed to our GREENSTEEL vision and firmly believe the future of steelmaking must focus on reducing emissions and using renewable energy and we will continue to work on the projects that will play a key role in this future.
“The Cultana Solar Farm project is now shovel-ready, we’ve opened several new mines and delivered a magnetite project which will be a first quartile high-quality magnetite source for GREENSTEEL production.’’
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