The Australian Workers’ Union says the future of the Whyalla steelworks appears assured after its billionaire owner Sanjeev Gupta inked a $430 million refinancing deal for it and his Tahmoor coking-coal mining operations.
The deal will help guarantee the jobs of about 1500 workers at Whyalla and another 400 at Tahmoor, NSW.
Both businesses had been imperilled by the March collapse of Greensill Capital, the international financier of Mr Gupta’s GFG Alliance.
Australian Workers Union’s national secretary Daniel Walton said the news was “vindication and relief for thousands of Australian workers”.
“The Whyalla steel industry is critical in terms of jobs and Australia’s sovereign capability,” Mr Walton said. “We could not allow it to fail.”
“This is an important day for the Whyalla community and the hard-working people at the steelworks, and this positive announcement is all down to them.
“It’s been a stressful time and they have worked so hard to keep Whyalla alive since the Arrium administration in 2016/17.
“This is now paying off. The economic outlook for the steel industry is strong and this new deal should enable them to build from here.
“Australia’s economy is also recovering faster and better than expected from COVID-19 and this will bolster demand for Australian steel.”
GFG Alliance said on Wednesday that its Liberty Primary Metals Australia, which includes Whyalla and Tahmoor, had agreed a deal to refinance loans previously extended by Greensill.
Greensill had lent Mr Gupta’s companies as much as $5bn, and its bank backers have been trying to wind up various Liberty companies here and in Britain.
The refinancing deal does not involve Liberty’s InfraBuild Australian steel businesses or TEMCO in Tasmania
InfraBuild, which employs 5000 workers and has a strong order book for structural steel, is funded by bond investors and did not rely on Greensill funds.
The Whyalla mining and steel operation is one of the more financially secure parts of Liberty Steel.
The steelworks represents 43 per cent of Whyalla’s local economy and employs 42 per cent of its workers.
On Wednesday Mr Gupta said the financing deal was sufficient to pay out Liberty’s Greensill debt in full and provide on-going working capital Whyalla and Tahmoor.
“The offer is subject to customary conditions precedent and documentation, a process which has commenced and is expected to complete within four weeks,” he said.
“GFG Alliance is in continuous discussions with multiple financiers on a competitive basis for various parts of its business and is committed to securing sustainable funding solutions to replace funding provided by Greensill.”
Mr Walton said while the news was a welcome relief, the AWU would be keeping a close eye on its implementation, as well as several remaining court actions still playing out after the Greensill collapse.
“Mr Gupta says this offer is subject to a process that could take four weeks to complete,” he said.
“He says this has already begun, but the AWU will be watching it’s progress all the way.”