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Legislative Council - Fifty-Fourth Parliament, Second Session (54-2)
2021-10-13 Daily Xml
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GFG Alliance

The Hon. T.J. STEPHENS (15:08): I seek leave to make a brief explanation before asking the Treasurer a question regarding Whyalla.

Leave granted.

The Hon. T.J. STEPHENS: Members would be aware that the wonderfully resilient citizens of Whyalla have been soldiering on whilst the city's largest employer, GFG, has had a financial cloud hovering above it. Can the Treasurer update the council on the current situation regarding GFG and Whyalla?

The Hon. R.I. LUCAS (Treasurer) (15:08): I acknowledge the honourable member's longstanding interest in Whyalla and the hardworking citizens of Whyalla. I have to say I am still occasionally approached in the Myer food court by people who continue to remind me of the honourable member's exploits in the early 1980s for the wonderful South Whyalla Football Club—but that's for another time.

It's pleasing for the workers and households in Whyalla that—I think it was only two or three days ago now that GFG Alliance announced, internationally, I should say, to the financial markets around the world, but of particular interest to us in Australia, a major announcement in relation to their debt restructuring.

I won't comment on the proposed actions in relation to the United Kingdom, Europe and America, but in particular the announcements in relation to the operations in Australia. Mr Jeffrey Stein, the chief restructuring officer, said:

I am pleased to report a significant advance in GFG Alliance's global restructuring. The debt restructuring we have agreed for LIBERTY Primary Metals Australia gives the business clarity and stability and secures a clear recovery plan for creditors. The funding we are injecting to LIBERTY Steel UK puts it in a strong position for business transformation and debt restructuring. The next stage in our global refinancing will be in Europe where a significant number of new lenders are expressing interest in refinancing our steel assets.

In relation to their Australian operations, they have stated a significant step forward in relation to their path to recovery following the collapse of their main lender, Greensill, in March is that GFG and Credit Suisse have agreed a debt restructuring for LIBERTY Primary Metals Australia, which comprises its integrated mining and primary steel business at Whyalla and the coking coal mine at Tahmoor.

In summary, GFG has announced that their record-breaking performances, following its operational efficiency drive, continuous improvement initiatives and favourable market conditions, underpinned by strong investment in infrastructure, has now led them to a stable financial platform for their Australian-based businesses.

The strength of the Australian businesses enables it to make a substantial up-front payment to Greensill Bank and to Credit Suisse, which has been closely involved in GFG's work to refinance and restructure. Under that agreement there is a significant up-front payment, as I said, and the balance will be paid in instalments to Credit Suisse and Greensill Bank through the amended maturity date of June 2022—so over the next 18 months or so.

The final bit of interest for Australians, and South Australians in particular, is the relative financial strength of the Australian operations, obviously off the back of the continued strength of steel and coking coal prices in the international markets. The simple figure in the accounts, and in this particular release, indicates that the profit of the Australian businesses, as measured by EBITDA, grew from $106 million in 2020 to $729 million in 2021. So their profitability, as measured by EBITDA, grew by $600 million—from $100 million in one year to $700 million in another year.

Put simply, the strength of their operating efficiencies, in particular, clearly driven by iron ore prices soaring internationally, has meant they have had the capacity to enter into this debt restructure with Greensill and Credit Suisse over a period of time leading through to 2023. If these statements are followed through, it will lead to the ongoing strength of operations of GFG at Whyalla.

I am sure all members in this chamber will be pleased to have seen that particular statement, as a result of weeks and months of negotiations. We are hopeful it will see that transition into implementation of further investment in further operating efficiencies, as well as the substantial long-term retention of jobs and job prospects in Whyalla for the hardworking families of Whyalla.

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