About 12 credible parties are sniffing around the Whyalla steelworks

KordaMentha has had inbound contact from 10 to 12 ‘credible parties’ to potentially bid for the Whyalla steelworks, as a timeline for the sale is revealed.

The blast furnace at the Whyalla steelworks is back operating at close to full capacity. Picture: Supplied

There are 10 to 12 “credible parties” interested in potentially making a bid to buy the Whyalla steelworks, with Australia’s largest steelmaker, BlueScope, among the pack, a community forum in Whyalla has heard.

KordaMentha partner Sebastian Hams, addressing the Whyalla One forum of workers and creditors in Whyalla on Wednesday morning, told the group that the firm, which is the administrator of the steelworks, aims to have it sold this calendar year.

Mr Hams, speaking to The Australian after the meeting, said KordaMentha was in the process of assessing the OneSteel Manufacturing business, which includes mining and steelmaking divisions, before work on a proposal to be put to potential buyers would be produced.

“As we have said before, the extent of the degradation in the plant exceeded even our own worst expectations, and a lack of labour and investment has led to safety concerns,’’ Mr Hams said.

“What has been the positive that we have found is that the employees of both OneSteel and our subcontractors have done an amazing job to keep the place safe.

“So that’s been the real positive. The negative has been the lack of investment in working capital, so we’ve got a material inventory build ahead of us, which is going to be really challenging.’’

SA Premier Peter Malinauskas stands on Hummock Hill in Whyalla, overlooking the steelworks. Picture: Brett Hartwig

Mr Hams earlier told the meeting that the steelworks had been held together by the efforts of “100 MacGyvers” referencing the 1980s television show in which the eponymous lead character solves difficult technical problems with whatever items he has to hand.

Mr Hams told The Australian that mining production going through the concentrator was now running at almost nameplate capacity.

“Through the blast furnace, we’re operating efficiently and at capacity,’’ he said.

“We’ve got some challenges in steelmaking which translates into steel products, but generally across the board, with the exception of steelmaking, we’re operating at a level that we would aim to be operating at.’’

Mr Hams said it was too early to say whether the operations were break-even at such an operating level. The administrators told the first meeting of creditors held early this month that the steelworks was losing $1.5m per day for the first seven months of the financial year under the ownership of Sanjeev Gupta’s GFG Alliance.

“There’s a lot of moving parts in getting to break-even, we’re not there yet,’’ Mr Hams said.

“We’ve established a base stabilisation across the supply chain.

“Our big challenge now, over the next few months, is to establish that stabilisation on an efficient basis.’’

Mr Hams said over the next couple of months the priority was getting the operations back to full efficiency.

Sanjeev Gupta’s InfraBuild, part of GFG Alliance, is claiming to be owed more than half a billion dollars.

“And then building the investable proposition for new buyers going forward and going out to the market to sell the business is the second priority,’’ he said.

“We’re currently working out what we have, building up those business cases, and making sure they’re consistent and meaningful, such that we give buyers confidence in the process that is underway.’’

Mr Hams earlier told the meeting that KordaMentha aimed to have the business sold this calendar year, but there were no guarantees around that.

He also confirmed that BlueScope was one of 10-12 interested parties which had come forward to date, and that in addition to the credible potential bidders, there had been several “tyre-kickers”.

BlueScope was brought in by KordaMentha to give advice around the operation of the blast furnace, which went cold twice last year and was not yet back up the full capacity when they were appointed.

Mr Hams said the blast furnace was now operating as expected.

Mr Hams also on Wednesday announced the employment of 63 new full-time staff, with 45 of those in the steelworks and 18 in mining.

Mr Hams said once those initial 63 staff had been onboarded, the administrators would look to employ another 30 people.

KordaMentha, in an affidavit lodged with the Federal Court earlier this month, had complained that they “are yet to receive unfettered access” to the books and records of OneSteel, which were held by GFG Alliance.

Mr Hams said this had since been rectified.

The South Australian government pushed OneSteel Manufacturing into administration in mid-February, with documents later revealing the government’s Department for Energy and Mining was owed $34.1m by the company and state water utility SA Water another $15.02m.

OneSteel Manufacturing’s debts were assessed by KordaMentha at $1.34bn, with other companies in Mr Gupta’s GFG group, including long steel products maker InfraBuild, claiming to be owed $536m.

The affidavit lodged by KordaMentha says the firm will be examining the “lawfulness” of some of the transactions behind those claimed debts.

Originally published as About 12 credible parties are sniffing around the Whyalla steelworks