Arrium and Whyalla steelworks to be sold to British company Liberty House
Thousands of jobs at the steelmaker Arrium, and possibly the South Australian regional town of Whyalla, have been saved with a deal struck for the sale of the company’s entire operations.
The London-based group GFG Alliance has signed a binding agreement to buy the entire operations, including the Whyalla steelworks, with the process expected to be finalised by August.
The purchase was secured after negotiations stalled with preferred bidder, the South Korean consortium Newlake.
Administrator Mark Mentha said GFG Alliance, owned by the Gupta family, submitted a modified offer on Tuesday night that was viewed to be superior.
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The deal is still subject to approval next week by the Arrium committee of creditors and the Foreign Investment Review Board.
The federal treasurer, Scott Morrison, who praised the deal, said those steps should proceed “speedily”.
“Our energy policies are all about ensuring that steel jobs continue to be maintained, whether it is there in Whyalla or elsewhere in the country,” he said.
The South Australian premier, Jay Weatherill, said that, while the sale was not completely across the line, it was a big win for Whyalla, the state and the country, bringing 15 months of uncertainty to an end.
Weatherill said GFG Alliance had offered commitments to maintain the Australian workforce and the government expected the new ownership to provide for further growth in the Whyalla operations.
“The sale of the whole of the business is a dramatic victory for us here in SA,” Weatherill said. “This is a great day for Whyalla, a great day for South Australia and a great day for the national steelmaking capability of this country.
“This is about building our nation, about building our national infrastructure. We cannot be beholden to other countries for our steel industry.”
Morrison said the deal would bring certainty to the workers in Whyalla and the broader community.
“It would have been a very anxious period of time for those workers, for those families and those communities, and we’re very pleased with that outcome,” he said.
The bid by the South Korean private equity firm, led by Newlake Alliance and JB Asset Management, and backed by technology from the steelmaking giant Posco, was selected as the preferred bid last month.
But the bid was understood to have asked for $400m in federal funding, on top of about $50m offered by the South Australian government to whoever bought the company.
Liberty House Group had offered to buy Arrium and keep Whyalla operational without any federal funding assistance.
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Mentha said the successful sale was a credit to those who worked hard to give the group the best possible chance of a future.
“This includes the employees, unions, management, local suppliers, the townspeople of Whyalla and three levels of government,” he said. “They have stuck solid through a torrid period, including gyrating ore prices, big increases in our coking coal prices and general economic uncertainty.
“Employees took a wage cut, management took a haircut, suppliers agreed to new terms and governments chipped in with funds and loan guarantees.”
The Australian Workers’ Union said GFG Alliance had an outstanding international reputation as a good corporate citizen.
“They have invested strongly in heavy industry in Europe and the UK and it is this mindset they will bring to Australia,” the AWU national secretary, Daniel Walton, said. “The Australian steel industry has a bright future and the GFG Alliance has the track record to realise it.”