A steelworks project owned by Indian tycoon Sanjeev Gupta has been ordered into administration by the South Australia government after his GFG Alliance failed to pay royalties.
The South Australian government “has been in receipt of advice from our steel taskforce that the owner of the steelworks' financial position wasn't just deteriorating, it was likely to continue deteriorating,” the state's premier, Peter Malinauskas, told reporters in Adelaide on Wednesday.
GFG Alliance has struggled to turn a profit at the project since company chairman Gupta first acquired it from bankruptcy in 2017. The Whyalla steelworks encountered a number of unplanned shutdowns for maintenance last year. Local media have reported issues with payments to contractors.
The steelworks has annual production capacity of 1.2 million tons, using a blast-furnace process.
Malinauskas said he wasn't at liberty to disclose the exact amount of royalties owed, but it was in the tens of millions of dollars. The premier added he was confident the project had a viable long-term future under a new owner.
GFG Alliance is a sprawling group of businesses that employs roughly 30,000 people in 30 countries. In recent years, a number of Gupta's companies have been shuttering production, failing to pay suppliers and staff, and falling into insolvency.
Last week, a lawyer representing GFG Alliance in a London court said the company was close to reaching a “global settlement” with the lenders, including UBS Group AG, on about £289 million ($365 million) of debt.
GFG's financial position “was compromising the very operations of the steelworks itself,” Malinauskas said. “That advice completely accords with all of the information that we are receiving on the ground from people who work within the steelworks.”
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