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Arrium sold to London-based group in "victory for SA"

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Troubled Whyalla steelmaker Arrium has been sold to London-based consortium GFG Alliance in what Premier Jay Weatherill has described as a "victory for South Australia". But the taxpayer bill to secure the deal remains under negotiation.

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Weatherill told reporters this morning that the “binding agreement” meant an end to 15 months of painful uncertainty for the people of Whyalla since Arrium, the town’s main employer, fell into voluntary administration.

“This is a great day for Whyalla, a great day for South Australia and a great day for the national steel-making capability of this country,” he said.

“The company themselves are pledging to retain all of the workforce at the Whyalla steelworks, and promising to invest in upgrading the steelworks in the future.”

GFG Alliance – of which Liberty House is a key part – is an international industrial, energy, natural resources and financial services group based in the UK.

In a statement this morning, the company said the deal was “expected to secure the jobs of over 5500 Australian workers”.

Weatherill said negotiations with the state and federal governments will continue over a taxpayer contribution to the deal.

He would not reveal the scale of possible taxpayer investment in the steelworks, but suggested the Government was willing to match company investment in the plant.

“We invest, if they invest,” Weatherill said.

The sale is also subject to approval by the Arrium Committee of Creditors and the Foreign Investment Review Board.

Opposition Leader Steven Marshall welcomed the deal.

“This is great news and the workers at Arrium and the general Whyalla community will be delighted with today’s announcement,” he said.

“After so much doubt and stress about the future of Whyalla’s steelworks this would be a tremendous relief for the workers and their families.

“This outcome is a great example of what can be achieved in adverse circumstances when the Federal Government and State Government work together for the common good.”

AWU National Secretary Daniel Walton said the finalisation of “the most complex administration process in Australian history” was great news for Arrium workers.

“This is the outcome we have been working so hard toward for well over a year. This is the certainty we wanted to deliver for workers and their families,” Walton said.

“Throughout this entire difficult 15 months Arrium workers – our members – have shown tremendous courage and discipline in keeping this operation humming along and producing the highest quality Australian steel.”

Weatherill said it would have been disastrous for Whyalla, but also for Australia’s sovereign capabilities, had negotiations to sell the steelworks failed.

“It doesn’t bear thinking about what would happen to the Whyalla community [if the steelmaker shut down],” he said.

“… any self-respecting nation needs its own capacity to create its own steel products … we cannot be beholden to other countries for a steel industry.”

But Property Council of Australia SA executive director Daniel Gannon said the State Government was sending an “appalling” mixed message to foreign investors.

He said the imposition of a new tax on residential property foreign investors announced in last month’s State Budget was inconsistent with the sale of the steelworks to a foreign buyer.

“The State Government has to work out which message it wants to send to foreign investors: South Australia is either open to foreign investment or closed,” said Gannon.

Weatherill used the announcement to rubbish the Australian Bankers’ Association’s campaign against another contentious budget measure – the tax on banks.

The association has commissioned advertising warning the tax, expected to generate $370 million over four years, meant: “Lights out on new investment. Lights out on jobs.”

Weatherill told reporters: “We’ve seen today that international investors have no problem with investing in South Australia.”

But he distanced the Government from Investment and Trade Minister Martin Hamilton-Smith’s suggestion that the Government should move its business away from the big banks as a result of the campaign.

“There’s no intention by the government to review that,” he said.

GFG Alliance secured the Arrium deal after the exclusivity period for the “preferred bidder”, a Korean private equity firm led by Newlake Alliance, expired without agreement being reached.

Treasurer Tom Koutsantonis said Newlake had withdrawn from the process late last week.

“The administrators had a tender process and that tender process shortlisted two candidates, and they got down to a … ‘one preferred bidder’ status – that ended on Friday night for Newlake, then over the weekend [there were] new negotiations and Liberty came in with a very strong bid,” said Koutsantonis.

“Last night, Liberty House signed the sale share agreement.”

He said both groups of companies were “world-renowned steel makers”, each with a track record of acquiring failing steelmaking operations and making them viable.

Koutsantonis thanked federal Industry Minister Anthur Sinodinos, adding that the Federal Government had been a willing partner in resolving the Arrium crisis.

GFG Alliance executive chairman Sanjeev Gupta thanked the federal and South Australian Governments “for their proactive and collaborative partnership with us in seeking solutions to the challenges faced by the Arrium businesses”.

“Looking forward, we will continue to explore opportunities to further grow our presence in Australia in adjacent and complementary industries, including renewable energy, metals and mining,” he said.

Weatherill said he would be meeting with representatives of GFG Alliance tomorrow, and travelling to Whyalla later in the week.

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