Whyalla steelworks creditor NRW claims GFG would have coughed up $70 million before Government takeover

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

KordaMentha, which is now running the mill, reportedly said the operation and the Middleback Ranges iron ore mine that feeds it had been losing $1.5 million a day. And creditors are owed $1.35 billion.

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.

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

At a creditors’ meeting in Whyalla today, KordaMentha’s Sebastian Hams reportedly said that steelworks had just $8 million left. “We had $8 million in the bank — for a business that turns over somewhere around over $1 billion, that is just crazy,” Mr Hams was reported as saying.

“And the working capital position, by virtue of the creditor arrears, was really quite scary.”

In a statement read to the meeting, GFG said it had been difficult to refinance the business owing to negative publicity. It said it has been running at 25 per cent capacity becuse of problems with the blast furnace over the past year.

It come as a major creditor argued it would have been paid $70 million by the GFG Alliance had the South Australian Government not “intervened”.

Shares in contractor NRW crumbled 9.3 per cent on Monday after resuming trade following a week-long halt spent finalising the financial fallout from its involvement in the collapse of Whyalla operation last month.

On a call with analysts on Monday, NRW chief executive Jules Pemberton said there had been about 600 staff servicing the SA iron ore mines before OneSteel was put into administration, and there were now about 300 following redundancies. Mr Pemberton revealed further details leading up to the contractor’s decision to stop working at the site in November, claiming OneSteel fell behind on its payments in August and September.

NRW agreed to resume work in early December after Sanjiv Gupta’s global metals business GFG Group secured new debt for Whyalla, reportedly from a global credit fund and worth $150 million. That was enough to assure the contractor it would see the money it was owed and continue working.

“He (Mr Gupta) announced that he was raising $US100 million from a very credible global fund who we have spoken to. Hence I knew it was credible, and unfortunately, some of that timing slipped, but we were promised $70 million given where our receivable was, it was part of the condition to continue,” Mr Pemberton said.

“It’s a pre-administration event, which had it worked in timing, or had the government not stepped in, our exposure would have been $70 million less.” He later in the call said NRW “didn’t expect the government to intervene as they have.”

Financials for the half-year provided to the market on Friday showed NRW had started demanding weekly repayments from the company as a condition to continue working at the site. NRW is owed more than $113m as of February when KordaMentha was called in to run Whyalla. The contractor has continued to provide services to the operation on the guarantee from administrators that it will get paid for the work it does from here on out.

Mr Pemberton rebuffed concerns from one analyst questioning whether it was worth the contractor’s while to stay on the project, given the uncertainty surrounding its future. “There is zero risk, once an administrator is in place, to being paid post administration. They are being funded by the State government and the Federal government, so they’re on the hook for making sure [of] those payments,” Mr Pemberton said.