Mali delivers coded messages to Sanjeev Gupta on Whyalla future | Paul Starick
Premier Peter Malinauskas wants a circuit breaker on Whyalla steelworks’ future and is delivering coded messages to Sanjeev Gupta, writes Paul Starick.
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Premier Peter Malinauskas is walking a tightrope by deliberately igniting intense debate about the Whyalla steelworks’ precarious future.
In a deliberately disruptive tactic, the Premier is escalating pressure on steelworks owner Sanjeev Gupta by issuing coded messages through a series of public comments.
The Malinauskas government is fast losing patience with Mr Gupta, particularly over his failure to fund a series of grand promises to transform the steelworks to deliver so-called green iron.
The government's political folly is being exposed. This is tying a flagship, government-owned and operated, $593m hydrogen power plant to supply a privately owned steelworks with a financially dubious backer.
So, Mr Malinauskas is preparing the ground to walk away from the Whyalla hydrogen power plant and divert the budgeted $593m into keeping the steelworks afloat.
Politically, the government can afford to sacrifice the hydrogen plant, which was revealed by The Advertiser in 2021 as Mr Malinauskas’s first major policy release a year out from the 2022 election.
This was, as I argued in 2023, the biggest gamble of Mr Malinauskas’s career so far. He has failed to excite a sceptical public and hydrogen energy plans are collapsing across the globe as they are abandoned by public enterprise.
A clever politician, Mr Malinauskas is seeking to turn this public disinterest into an opportunity.
He won’t lose many votes if the hydrogen plan is effectively abandoned. But a Whyalla steelworks closure would be a political and economic catastrophe.
A year out from a state election, this might swiftly turn the tide against a government that has been buoyed by improved state pride and low unemployment.
Mr Malinauskas has a grand plan. But he’s keeping his cards close to his chest, deliberately, and gradually raising the temperature with his public statements.
Reading the signals, this multistage plan seems to involve flushing out Mr Gupta by intensifying pressure on him to either invest in a Whyalla future or enter voluntary administration to escape his substantial debt burden.
The government, which Mr Malinauskas told parliament on Wednesday is owed “in the tens of millions” of dollars in royalties by Mr Gupta’s GFG Alliance, could trigger an administration by calling in those debts.
But Mr Gupta is being given what seems like a last chance to stump up cash, because the blast furnace resumed operation in January and staff, at least, seem to be receiving pay.
In the background, though, the state government clearly is preparing for life after Gupta.
Mr Malinauskas last September revealed he had personally held talks with five steel firms as he declared Whyalla steelworks’ ownership “second” to his long-term green iron plan.
Asked at the time in parliament by the Opposition if there had been talks with other firms to run the steelworks, Mr Malinauskas said these had occurred with “a range of companies” about a government green iron and steel strategy centred on Whyalla. Days before, The Advertiser revealed the government was seeking urgent advice on its exposure and role should GFG Alliance’s embattled Whyalla steelworks and iron ore operations be placed in voluntary administration.
It is understood lawyers are now crawling all through the State Administration Centre, where Mr Malinauskas is attending meetings about Whyalla “two or three times a day”.
The next stage appears to be finding a new owner, backed by state and federal money likely amounting to more than $1bn, to step in swiftly when, and if, Mr Gupta is pushed into administration.
The looming federal election gives the Premier a bargaining tool to seek bipartisan funding promises.
Whyalla might be too big to fail, as the nation’s only structural steel manufacturer. But the owner is a chameleon who is beyond the control of governments, leaving them to walk a precarious path to preserve the steelworks and Whyalla itself.
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