SA government began Whyalla steelworks administration talks last year

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, according to documents released on Monday.

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.

Documents indicate that Bruce Carter, head of the state’s Steel Task Force, called Mark Mentha on 23 December “to discuss the status of the Whyalla steelworks and the possibility of the company entering into external administration in the future”.

By late January, a KordaMentha team travelled to South Australia to meet with state government executives, with further meetings held over the following weeks to discuss the appointment’s details and legality.

The State Government acted on OneSteel entities as it was owed both royalties and a large water bill from SA Water, which presented them with debts held against both the Whyalla infrastructure and the land.

KordaMentha has estimated the administration will cost about $10 million. The firm has been issued an upfront $100 million by the SA government and indemnified up to $400 million to keep the steelworks operating.

Last week, the state and federal governments announced a $100 million short-term assistance package for creditors, including $50 million in creditor payments, and $384 million split evenly between the two governments to fund the steelworks under administration.

GFG Alliance’s Sanjeev Gupta said in a note to staff that while he believed in Whyalla’s future potential, “the cost to the group has been huge” and without these costs, the broader GFG group would be better off.

A creditors’ meeting will be held in Whyalla on Monday, 3 March.

Picture: credit GFG Alliance