(Bloomberg) — An Australian steelworks owned by tycoon Sanjeev Gupta will receive a A$2.4 billion ($1.5 billion) government bailout package, a day after it was forced into administration due to unpaid debts.
Australian Prime Minister Anthony Albanese told workers at the site of the Whyalla steelworks in South Australia on Thursday that the funding, which would be split between the federal and state governments, should ensure the plant could keep operating and was an “investment in our nation.”
Earlier Thursday, South Australia Premier Peter Malinauskas — who issued the administration order — said in a radio interview he had been speaking to companies, including Bluescope Steel Ltd.. to take control of the steelworks. It wouldn’t be a “quick transition,” he said.
The bailout is the latest sign of turmoil for Gupta’s GFG Alliance, a sprawling group of businesses that employs roughly 30,000 people in 30 countries. In recent years, a number of Gupta’s companies have been shuttering production, failing to pay suppliers and staff, and falling into insolvency.
An email and call to Bluescope seeking comment wasn’t immediately answered. GFG Alliance said in a statement Wednesday that it was assessing what the administration order meant and was seeking advice on its options.
GFG Alliance has struggled to turn a profit at the project since company chairman Gupta first acquired it from bankruptcy in 2017. The Whyalla steelworks, which has annual production capacity of 1.2 million tons, encountered a number of unplanned shutdowns for maintenance last year. Local media have reported issues with payments to contractors.
On Wednesday, Malinauskas announced that he had passed urgent legislation to put the steelworks into administration as his government had received advice that “the owner of the steelworks’ financial position wasn’t just deteriorating, it was likely to continue deteriorating.” He wouldn’t reveal the exact amount of money owed in royalties but said it was in the tens of millions of dollars.
Speaking in a radio interview on Thursday, Albanese didn’t rule out nationalizing the steelworks if a buyer couldn’t be found.
“We want it run by the private sector, but we’ve intervened here with the administration to make sure that while that process goes on, the steelworks continues to operate, people continue to get paid,” he said. “We look after local businesses and the local community.”
Included in the funding is about A$100 million for immediate support, with A$384 million to keep the steelworks operating during administration.
–With assistance from Paul-Alain Hunt and Sybilla Gross.
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