Despite the 30 per cent global “efficiency” target announced this month, GFG reaffirmed its commitment to upgrading the ageing Whyalla steelworks it bought in 2017.
This month it also unveiled more details about its $1 billion Whyalla expansion including the installation of an electric arc furnace, a direct reduced iron facility and a new state-of-the-art rolling mill by 2024.
It has promised no job losses at the Whyalla plant, which has about 1200 permanent staff and a few hundred contractors.
Efficiency problems still exist in Whyalla with the company also this month launching a three-month review to identify and implement major cost reductions to its legacy primary steel making facilities, which it concedes remain “financially challenged”.
Gupta’s GFG Alliance other Australian interests also include an East Coast integrated manufacturing, distribution and recycling business formerly known as OneSteel, iron ore mines in South Australia, coking-coal operations in NSW and an iron ore bulk handling facility at the Whyalla port.
The billionaire British industrialist also has plans to develop 1GW of dispatchable renewable energy, starting with the 280MW Cultana Solar Farm near Whyalla, which is expected to begin construction this year.
GFG says it has put in place extra funding arrangements to ease pressure on its challenged Whyalla steelmaking business while the review undertakes the turnaround to identify savings and efficiency gains.
The Australian reported this month Gupta had already pumped $115m of new money into his struggling Australian operations so far this year, and is seeking loans worth another $175m to keep them afloat beyond 2021.
In a statement this month, GFG Alliance said its global plan was to deliver up to 30 per cent in overall efficiency gains by cutting corporate overheads, efficiency and productivity programs and headcount reduction “in certain locations” to help adjust to a new market environment.
It said demand from steel consuming sectors in certain regions has dropped 20-40 per cent as a result of the COVID-19 pandemic, an impact which was likely to continue for 12 to 18 months, compounding an already challenging market.
The Australian Workers Union, which represents Whyalla steelworkers, has released a couple of statements of its own this month, first welcoming the commitment to the Whyalla expansion and then to clarify the impact of the cost cutting program on Australian jobs.
It also sought assurances that the Whyalla expansion would not come at the expense of production on Australia’s East Coast.
“They (GFG) have made it clear that under this plan, production facilities in Whyalla, Laverton and Rooty Hill will be complementary and not in competition with one another for production and market share,” the AWU statement said.
“While the AWU will watch this matter closely, it is exciting to see new investment in Australian steel manufacturing for the first time in many decades.
“The AWU will work closely with GFG Alliance to identify where savings can be made without reducing positions,” the statement said of GFG’s cost reduction program.
“The union remains committed to fighting for every single job.”
Whyalla Mayor Clare McLaughlin said the fact GFG was still looking to push ahead with its Whyalla expansion was positive for the community.
She said the success of the steelworks – the region’s largest employer – was “absolutely paramount” to the local economy.
“I don’t think we have concerns, we support GFG and we understand their position as they’ve given it at the moment,” McLaughlin said.
The efficiencies are being looked at in all his companies throughout the world and the statement last that there would be no job losses in Whyalla is confidence building.
“The fact that the Whyalla plant along with ones in Romania and the Czech Republic are earmarked for development moving forward is a positive sign as well for Whyalla.”
Gupta, GFG Alliance’s Executive Chairman, said it was important for the people of Whyalla embraced change as the company’s current operation approached financial viability, which would enable the long-term vision of a sustainable steelworks.
“Finalising the funding and the ultimate construction of the Transformation Project, while ensuring the immediate financial viability of the operations, will enable GFG’s vision of a revitalised, world-class Whyalla operation to become a reality,” he said.
“With the continued hard work and commitment of all our employees and stakeholders, I remain confident that we will be successful in our mutual goal of creating an exciting and vibrant future for generations to come.
“I am determined that the steps we take now will make us an even stronger group. Our focus on sustainable steel, aluminium and metals production, and on developing sources of renewable energy, is stronger than ever.”
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