Whyalla rescue signals big expansion in SA renewable capacity
July 8, 2017
The GFG Alliance, which has signed a binding agreement to buy Arrium assets including the Whyalla Steelworks out of administration, has outlined plans to spend around $1 billion in addition to the sale price on the steel plant and associated infrastructure, including renewable power capacity that will feed extra electricity into the South Australian grid.
The first stage of the investment, which will be rolled out over a number of years, will be an upgrade of the existing co-generation plant at the steelworks to an 80 megawatt plant. This will be followed by a larger solar and pumped hydro plant capable of delivering 250 megawatt or more.
The plans were outlined in the final successful bid for Arrium by the GFG Alliance, the British-based industrial, energy, natural resources and financial services group founded by the Gupta Family.
Arrium went into administration early in April, 2016 with debts of $4 billion.
Executive Chairman, Sanjay Gupta, said that GFG Alliance would be looking to further expand its interests in Australia in adjacent and complementary industries, including renewable energy, metals and mining.
“We have a vision to create a vertically integrated and sustainable industrial business that encompasses mining, metal recycling, primary metal production, engineering and distribution, and which also includes the use of renewable energy consistent with our GREENSTEEL strategy. We aim to leverage the advantages of integration across the value chain, from raw materials and metal production to high-end engineered products, coupled with supply chain and value added financial solutions.
“The Arrium business fits perfectly with this strategy and we believe it has an exciting future leveraging our GREENSTEEL vision which has been well proven in the UK. The acquisition will secure the jobs of over 5,500 Australian workers, a similar number to that which GFG Alliance has saved in the UK", Mr Gupta said.
Michael Morley, Development Director for the GFG Alliance said: “Arrium is well placed to play a significant role in the expected growth in infrastructure spending in Australia over the coming years. The business is endowed with an experienced and skilled workforce, well-run operations, strong brands and long-established customer relationships and we look forward to exploring opportunities to grow the business further.
“Whilst the Whyalla Steelworks has faced well-publicised operational and financial challenges over recent years, we have developed a comprehensive plan to secure its long-term future and that of the local community. Our plan focuses on reducing the cost of iron ore feed, targeted modernisation investments, energy generation, expanding production and creating high value export opportunities," Mr Morley said.
"We are particularly excited by the opportunity for the Whyalla Steelworks to directly supply intermediate steel products to our UK rolling mills that are currently sourced from third parties. Whilst our plan remains subject to reaching agreement with Government, we have had regular and constructive discussions with both the Federal and South Australian Governments throughout the sale process and look forward to continuing those discussions now the acquisition has been agreed.”
Completion of the binding agreement is expected to occur on August 30, 2017, subject to limited conditions.