Sanjeev Gupta slashes Australian workforce in global COVID revamp

Sanjeev Gupta has slashed more than 10% of the workforce from his Australian building materials and steel distribution arm as he resets his global empire.

Last month the British metals magnate Sanjeev Gupta cut a deal to ­acquire the TEMCO manganese smelter in Tasmania owned by South32 and Anglo American. Picture: John Feder/The Australian

Sanjeev Gupta has slashed more than 10 per cent of the workforce from his Australian building materials and steel distribution arm as he resets his global empire to withstand the impact of the coronavirus crisis.

Accounts lodged by Liberty InfraBuild, part of the OneSteel business bought by the British businessman in 2017, show the company cut deep into its Australian operations amid a massive restructuring of Mr Gupta’s global metals and mining empire brought on in June by the coronavirus crisis.

In June, Mr Gupta flagged the need to find cost savings and productivity gains worth 30 per cent of current costs, including cuts to the 35,000-strong workforce across his global empire.

The warning came as it struggled with the impact of the economic downturn caused by the coronavirus pandemic, including a 20 to 40 per cent drop in steel demand in key markets.

And while the British metals magnate has ring-fenced South Australia’s Whyalla steelworks from any cuts, as the centrepiece of his $1bn ambition to build a carbon-neutral steel industry by 2030, the rest of his Australian businesses have not been immune.

The InfraBuild accounts say the company has cut 550 of the estimated 5000 workers it employs across the group, and flagged the closure of 17 of its distribution centres and other sites.

It is understood the distribution centre closures are part of an ongoing rationalisation of InfraBuild’s Australian operations, as the company absorbs the minor acquisitions of former rivals such as Steelforce, Tonkin Steel and Matthews Metal.

But the deep cuts extend to the company’s sales and manufacturing workforce, as well as to its Australian corporate headquarters, with its back-end workforce downsized as its operations and acquisitions are consolidated and in response to Mr Gupta’s decision to return to his primary residence in Britain after his Australian buying spree.

InfraBuild chief executive Daksesh Patel told The Australian that, despite the disruptions from the pandemic in Australia, its operations were trading “resiliently”.

“From our point of view, with the exception of Victoria, we have seen minimal disruption to our supply chains.

“Due to the recent government stimulus programs, we anticipate a pick-up in dwelling commencements that will help boost the residential market, and increase activity for detached housing. However, benefits from non-residential and engineering construction projects are still to flow — though government-backed infrastructure projects continue to consume Australian-made steel,” he said.

“Given the uncertain outlook in the next 12 to 18 months, we needed to reorganise and reset our cost base, removing 550 roles and consolidating some of our distribution sites. Part of the amalgamation of sites formed our new go-to market strategy where we had a duplicated footprint. The cost restructure involves removing management layers and streamlining our corporate services. The majority of impacted roles were salaried roles rather than manufacturing roles.”

Mr Gupta’s Australian businesses still employ more than 6500 workers, including 4500 through InfraBuild and about 2000 at Whyalla, the group’s coal and iron ore mines and in its corporate back office servicing its scattered assets.

The accounts show InfraBuild booked an $11.6m net profit in the year ending June 30 on earnings before interest, tax, depreciation and amortisation of $217.7m and receipts from customers of $4.4bn.

During the year InfraBuild took a cash injection of $224m from the issue of shares and refinanced its debts, issuing $US325m ($448m) worth of senior secured notes to replace a previous lending facility.

InfraBuild finished June with $237.9m in cash. But while Mr Gupta has been consolidating his existing businesses, he has continued to snap up ageing manufacturing assets put on the market by others.

Last month the British metals magnate cut a deal to ­acquire the TEMCO manganese smelter in Tasmania owned by South32 and Anglo American, offering a “nominal” sum to rescue the smelter from the threat of closure and extend his control of the steelmaking supply chain in ­Australia.

In addition to South Australia’s Whyalla steelworks, his Liberty Primary Metals also owns an iron ore mine supplying the facility, and the Tahmoor colliery in NSW, which supplies it with metallurgical coal.

Mr Gupta was also linked to the potential acquisition of Alcoa’s Portland aluminium in Victoria, although his interest in the facility is believed to have dropped to the corporate backburner. He is still negotiating with Alcoa over the purchase of the San Ciprian aluminium smelter in Spain, however, also under threat of closure, with a deal due to be finalised by the end of ­September.