Sanjeev Gupta’s Whyalla steelworks losing $1.5m a day with $1.35b owed, creditors meeting hears

Sanjeev Gupta’s collapsed steelworks at Whyalla lost $319 million in the seven months before the South Australian government sent it into administration last week.

KordaMentha, which is now running the mill, said the operation and the Middleback Ranges iron ore mine that feeds it is losing $1.5 million a day, according to the Australian Financial Review.

Creditors are owed $1.35 billion, the newspaper reported on Monday.

Mr Gupta last week said his GFG Alliance is owed $500m from the steelworks, while more than 200 creditors are set to claim their share of cash.

Premier Peter Malinauskas said he expected KordaMentha to run the mill until the middle of 2026, the AFR said.

The newspaper reported that GFG had told a meeting of creditors on Monday that negative media reports had made it difficult to refinance the mill, which it said has been running at about 25 per cent capacity because of problems with the blast furnace over the past year.

“It was very clear there were a whole range of intercompany loans that were going in GFG,” Mr Malinauskas said.

In a message to staff, Mr Gupta said the events at Whyalla were “unexpected and disappointing” and labelled the SA Government’s move “unprecedented”.

“Our efforts to restart the blast furnace and recapitalise the business were progressing well,” he said, referring to a shutdown at the end of last year.

“Particularly as we were also navigating the worst steel crisis in over a decade, with producers globally facing enormous losses.”

The SA Government has stumped up $100 million to fund the administration and indemnified Kordamentha for a further $400m. Onesteel had almost 1500 staff who were expected to be owed more than $100m.

The troubled steelworks was previously owned by Arrium, later OneSteel, which hit the wall in 2016. Mr Gupta bought the plant from administration.

The Federal and SA governments started pumping in vast sums of cash from a $2.4 billion rescue fund into the Whyalla steelworks at the end of last month after GFG failed to pay its debts.

GFG on Wednesday was stripped of Whyalla’s ownership after the SA Government called in administrators over the unpaid money.