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Highlights
- GFG Alliance secures new debt funding to aid Whyalla steelworks operations.
- Major suppliers suspend services due to unpaid bills.
- Technical issues halt steel production for ten weeks in Whyalla.
GFG Alliance, led by Sanjeev Gupta, has announced a new debt funding initiative aimed at addressing cash flow issues at its Whyalla steelworks in South Australia. The company has negotiated a term sheet for $US100 million (approximately $150 million) with a significant global credit fund, though the fund's identity has not been disclosed. The funding is expected to be finalized by the end of the current calendar year.
The Whyalla steelworks, located about 380 kilometers north of Adelaide, has faced operational and financial challenges in recent months. Suppliers, including rail freight providers Aurizon (ASX:AZJ) and Pacific National, have temporarily ceased services due to unpaid bills, further complicating operations. Despite these setbacks, Gupta, the executive chairman of GFG Alliance, remains committed to revitalizing the facility.
Gupta emphasized the importance of the new funding in driving the group's turnaround efforts. "Our new round of funding reaffirms my faith in Whyalla and our Back to Black plan, which aims to restore sustainable profitability and support the future of steel and mining operations in the region," Gupta stated.
The Whyalla steelworks has also been plagued by technical difficulties. Production has been halted for the past ten weeks due to issues with the facility's blast furnace. This follows an earlier shutdown this year, which saw the plant offline for nearly four months between March and July due to a crack in the furnace. These recurring problems have raised concerns about the plant's ability to maintain consistent operations.
GFG Alliance has been under pressure to address these challenges while ensuring the sustainability of its operations in Whyalla. The steelworks is a key component of the region's economy, providing employment and supporting local industries. Gupta’s focus on the Back to Black strategy reflects the group’s commitment to overcoming current hurdles and building a more stable future for the site.
As the company moves forward, the completion of the new funding round will likely be critical in stabilizing its operations and rebuilding trust with its suppliers and stakeholders. The next steps in addressing technical and financial challenges will determine the success of the revitalization efforts at the Whyalla steelworks.
