A coal billionaire and an Indian giant on shortlist to save Whyalla

A fight for control of Australia’s troubled Whyalla steelworks has narrowed to a shortlist of two potential buyers, pitting coal billionaire Matt Latimore against India’s third-largest steelmaker.

South Australian Premier Peter Malinauskas and federal industry minister Tim Ayres on Wednesday said a long-running sale process for the steel mill and its nearby iron ore mines that had attracted more than 70 interested bidders was now in its “final stages”.

Owned by British billionaire Sanjeev Gupta’s GFG Alliance, the steelworks north of Adelaide was pushed into administration just over a year ago, owing tens of millions of dollars in unpaid debts and royalties.

At the time, the state government appointed KordaMentha as administrators to manage the facility and oversee the sale process. Up to $1.9 billion in state and Commonwealth funding is on the table to upgrade the steelworks to a “modern, low-emission” facility if a new owner can be found.

With approximately 3000 direct and indirect jobs hanging in the balance, the South Australian and federal governments consider the Whyalla steelworks to be critical to the future of Australia’s sovereign capability and manufacturing base

“It’s so important that we don’t just get a new owner but the right new owner,” Malinauskas said on Wednesday.

M Resources and India’s Jindal Steel had put on the table “formidable” propositions that would deliver a major recapitalisation of the operations in Whyalla, he added.

“We are pleased to see two high-quality bidders shortlisted for the sales process,” he said.

M Resources, a Brisbane-based metallurgical coal trading and logistics group, said the steelworks and high-quality iron ore mines were a natural fit for the company. Latimore said the company was putting its “best foot forward to secure these assets in Australian hands”.

“We don’t just have a plan – we have the capability and desire to execute,” Latimore said. “We will be laser focused on bringing the assets to their full operational value.”

Jindal Steel, one of India’s largest steelmakers, could not immediately be reached for comment.

Another consortium led by Australia’s largest steelmaker BlueScope that includes Japan’s Nippon Steel, Korea’s POSCO and India’s JSW Steel that had long been considered the frontrunner, was not named in the shortlist of preferred bidders. The consortium would still hold a “right of last offer” to match any final bid lobbed by the two shortlisted companies, the state government said.

BlueScope on Wednesday confirmed its consortium retained that right, but was under no obligation to make an offer to acquire the Whyalla steelworks. A spokesperson said BlueScope had stressed it required clearer details about the funding commitments from state and federal governments before it could move forward with an offer.

“Any decision to make an offer to acquire and develop expanded operations at Whyalla would be subject to appropriate due diligence and the consortium members’ return on investment hurdles,” the spokesperson said.

Malinauskas said he had spoken to BlueScope chief executive Tania Archibald to thank the company for helping support steelworks.

KordaMentha partner Sebastian Hams said he was confident a sale could be finalised by about the end of September. “There’s a lot of moving parts that need to happen here,” he said.

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