Australian government under pressure to develop Gupta contingency plan

The Australian government is under increasing pressure to draw up contingency plans if industrialist Sanjeev Gupta is unable to secure emergency funding to save metallurgical operations that employ thousands of people.

The announcement made on Friday by the UK’s Serious Fraud Office launched an investigation into GFG AllianceThe sprawling Gupta conglomerate, on suspicion of fraud and money laundering, has heightened fears among thousands of Australian steelworkers who were hoping a bailout deal would be reached.

The industry’s main Australian assets are a steel plant in the southern Australian city of Whyalla and a coking coal mine at Tahmoor.

Rex Patrick, a senator for South Australia, said the SFO investigation revelations “cast a very thick cloud over whether the group will be able to secure and keep the funding.”

“Australia must under no circumstances see this sovereign steel production capacity disappear. It is important for manufacturing, national resilience and national security, ”he added.

Gupta’s empire has been trying to secure new funding since March, when Greensill Capital, its main lender, collapsed into administration.

Whyalla Steel Plant © J Marshall / Tribaleye / Alamy

A few hours after the OFS disclosed his probe, White Oak Global Advisors, a San Francisco-based private finance company that had been in talks to provide loans to GFG’s Australian and UK steel mills, said it could no longer continue the talks.

He then appeared to go back to those remarks in another statement indicating that he remained in talks to refinance Australian steel mills. Talks are continuing, sources familiar with the matter said on Sunday. White Oak declined to comment.

GFG has denied any wrongdoing and has pledged to “fully cooperate” with the SFO probe.

Eddie Hughes, a former metallurgist and now MP for South Australia, said if there was an underlying confidence in the viability of the Whyalla plant, it would be irresponsible if the state and federal governments did not contingency plans in place to secure Australia from GFG. companies could continue if a financing deal did not progress.

He said it was important that GFG’s various Australian businesses, which include the Whyalla steel mill, iron ore mines and Infrabuild, a steel manufacturing and recycling division, were not split up and sold separately. in the event of GFG collapse.

“Steel mills would be vulnerable if disbanded and government could have a role to play in making sure that doesn’t happen,” said Hughes.

Credit Suisse is asking for the liquidation of the Whyalla steel plant to recoup losses on invoices, which Greensill has wrapped up in bonds and which the Swiss bank has sold to its customers.

The Australian Federal Government and the State Government of South Australia, both led by the Liberal Party, have so far ruled out any intervention to support Gupta’s operations.

“We’re not going to speculate. I think there has been speculation in the UK about nationalizing private companies. But it is certainly not something the government of South Australia is considering, ”Rob Lucas, treasurer of South Australia, told the Financial Times.

The government is monitoring available information regarding the UK fraud investigation, he added.

A spokesperson for the Minister of Industry said the situation was being watched.

In the UK, where Gupta’s steelworks employ around 3,000 people, the UK Steelworkers’ Union has described the news of the SFO investigation as a ‘worrying development’ and urged not to ‘distract all parties’ attention. the security of our members. “Jobs and the protection of these crucial strategic enterprises”.

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