The SA government started talking to KordaMentha about its Whyalla plans last year

The timeline for when talks started between the South Australian government and administrators – before the extraordinary move on steelworks owner GFG Alliance – can now be revealed.

Sanjeev Gupta, executive chairman of GFG Alliance, visiting the steelworks at Whyalla.

• Whyalla Steelworks forced into administration
• Whyalla move ‘wrong’, Gupta says

The South Australian Government’s Steel Task Force has been meeting secretly with KordaMentha since before Christmas, as a strategy to push the Whyalla steelworks into administration was formulated.

KordaMentha was appointed as administrator of steelworks owner OneSteel Manufacturing – a GFG Alliance subsidiary – on Wednesday last week after an emergency sitting of state parliament.

The administrator, headed by Mark Mentha who oversaw the administration of Arrium in 2016 which resulted in the sale of the steelworks to Sanjeev Gupta’s GFG, has estimated at this early stage that the administration will cost about $10m, with administration costs typically covered by the proceeds of any sale of the business involved.

Mark Mentha oversaw the administration of Arrium in 2016.

KordaMentha also said in documents filed on Monday it had been issued an upfront $100m by the SA government to contribute to the estimated cost of the administration, while the administrator has also been indemnified by the government up to a cap of $400m to keep the steelworks operating.

Documents sourced by News Corp Australia last week indicate KordaMentha was paid more than $14m for the Arrium administration.

The new documents released on Monday state that the head of the state’s Steel Task Force, Bruce Carter, called Mr Mentha on December 23, “to discuss the status of the Whyalla steelworks and the possibility of the company entering into external administration in the future’’.

Towards the end of January the momentum picked up, with a call between the two to discuss the possible appointment of KordaMentha as administrators held on January 20, with a team from KordaMentha travelling to South Australia in late January to meet with a number of state government executives.

SA premier Peter Malinauskas with the head of the Steel Task Force, Bruce Carter, and Mining Minister Tom Koutsantonis.

The details of the appointment, including its legality, were further thrashed out over a number of high level meetings over the next two weeks, with the unusual role of the State Government in leading a push for administration discussed.

A meeting on February 19 – the day the administration was pushed through – “was for the potential administrators to obtain a better understanding of the legal basis for the proposed appointment by the state and to better satisfy themselves as to the validity and enforceability of the state’s security and that secured moneys remained unpaid, prior to signing a

deed of appointment’’.

The State Government was able to act across the relevant OneSteel entities to secure the administration, as it was owed both royalties and a large water bill owed to SA Water, which presented them with debts held against both the Whyalla infrastructure and the land it sat on.

The documents filed by KordaMentha on Monday also indicate the firm had been asked by a group of creditors including GFG Alliance’s former financier Greensill Capital – which itself had by this time collapsed – and Credit Suisse, to review GFG’s other Australian business InfraBuild, which recycles scrap metal and makes long steel products, back in 2022.

This review also included the Whyalla operations and the Tahmoor coal mine, also owned by GFG. That process finished in January, 2024.

KordaMentha said as part of its deal with the state government, it would provide forecasts and reports so that the government remains updated on the cost of the administration.

“This includes fortnightly forecasts and reconciliations against actual costs, and such further information as the state may reasonably require in respect of forecast or actual costs,’’ KordaMentha said.

Prime Minister Anthony Albanese meeting with steelworks staff in Whyalla.

The state government last week announced, in combination with the federal government, a $100m short-term assistance package for creditors of the steelworks, including $50m in creditor assistance payments, and $384m split evenly between the two governments to fund the running of the steelworks under administration.

Mr Gupta said in a note to staff last week that the government’s move to put the steelworks into administration was “wrong” and that GFG companies made up the majority of the creditors.

But he said without the costs associated with Whyalla the broader GFG group would be better off.

“While I care deeply about Whyalla and believe in its future potential, the cost to the group has been huge, and we will no longer need to use our resources to cover those losses,’’ he said.

“My intention is to continue to pursue options to raise capital at Tahmoor, debt and equity, to support the operations and growth of this tier one asset.

“In the short term, this will make our Australian businesses stronger and gives us a better foundation to grow in future and deliver other strategic projects.’’

A creditors’ meeting for companies owed money by OneSteel Manufacturing will be held in Whyalla on Monday, March 3.

Originally published as The SA government started talking to KordaMentha about its Whyalla plans last year