In a bold and unprecedented move, the South Australian government has taken control of Sanjeev Gupta’s Whyalla steelworks, placing it under administration due to mounting unpaid bills and alleged underinvestment. This action could have far-reaching consequences for Gupta’s global metals empire, GFG Alliance, which has already faced numerous legal challenges and investigations. The government's decision comes after years of financial instability and creditor lawsuits, as well as concerns over the future of the steel industry in the region. The intervention aims to secure the future of steelmaking in Whyalla while addressing the company's deteriorating financial health.

The South Australian government acted swiftly on Wednesday, passing legislation that amended the Whyalla Steelworks Act, originally enacted in the 1950s. This new law granted the state access to the company’s accounts and priority over its debts. To ensure the long-term viability of the steelworks and related operations, including nearby iron ore mines and a deep-water port, the government appointed KordaMentha as administrator. This move was seen as necessary to prevent further destabilization of an already troubled global metals empire.

Peter Malinauskas, the Premier of South Australia, acknowledged that the decision to place the steelworks into administration was both unusual and unorthodox. However, he emphasized that it was the best course of action to preserve the steelmaking industry in the region. Malinauskas expressed concerns about the risks involved in bailing out GFG Alliance, stating that there was no guarantee the funds would be used appropriately or that they would represent the final amount needed. The premier also highlighted the growing financial strain at Whyalla, noting that GFG had failed to make the required investments into the operations.

Gupta, once hailed as a "white knight" when he acquired the Whyalla business in 2017 for A$700 million, has faced increasing criticism over unpaid bills and underinvestment. Local contractors have been forced to stand down staff due to delayed payments, and the state-owned water company is owed A$15 million. Despite these challenges, Gupta recently claimed that the business was on track to break even by mid-2025. However, local politicians have raised concerns about the company trading while insolvent, with significant arrears owed to suppliers and the government.

The South Australian government’s decision to intervene in Whyalla steelworks marks a critical turning point for the region’s industrial future. By placing the company under administration, the government aims to address the immediate financial issues while exploring options for long-term sustainability. Analysts suggest that this move is essential to prevent further erosion of the business and ensure the wellbeing of employees and local stakeholders. As the situation unfolds, all eyes will be on how this intervention impacts the broader operations of GFG Alliance and the future of steelmaking in South Australia.