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The Sanjeev Gupta-led GFG Alliance is spending big on its ambitious strategy to subvert Australia’s dominant ‘dig and deliver’ approach.
British billionaire Sanjeev Gupta’s GFG Alliance is on an Australian spending spree. The new owner of Arrium’s Whyalla has big plans to put Australia on the map as a global leader in vertically integrated steel and aluminium production — and the path to achieve this is nothing short of impressive.
GFG’s landmark acquisition of Arrium’s Whyalla steelworks in August 2017 was just the first step in Sanjeev Gupta’s plan to transform Australia’s steel and aluminium industry, and become one of the country’s largest renewable energy producers.
Mr Gupta has already made a big name for himself and his $14.5 billion business in the UK — and more recently the US and Europe — where he has rescued and revived a number of distressed metals, mining, engineering and power generation operations over the last three years.
His core business strategy is to own and manage as much of the supply chain as possible – adding value at each stage.
The GREENSTEEL model is designed to secure a competitive, low-carbon future for metal manufacture through recycling, use of renewable energy and vertical integration; defying common perceptions of metal manufacture as a dying industry.
In Australia, Mr Gupta plans to replicate this business model.
In April 2017, the group announced it had employed senior international metals and mining executive Michael Morley to spearhead the acquisition of the Arrium business.
But Arrium, the cornerstone of the Group’s Australian strategy, wasn’t always a ‘done deal’ for GFG Alliance.
The acquisition took months of back and forth and extensive research, Mr Gupta’s right hand man, GFG Alliance chief investment officer and SIMEC Group energy and mining chief executive Jay Hambro said.
“It was very tiring, I commuted back and forth from Europe to Australia about 12 times last year, and never for more than about five days at a time,” Mr Hambro told The Australian Mining Review.
“But doing that sort of travelling gives you plenty of time to think and contemplate your actions, and I think we set about that [acquisition] process very effectively.
“We did a huge amount of due diligence on all of the businesses, and we had a very good team analysing it which put us in a very strong position.
“We also enjoyed a strong relationship with the Government and got to know Malcolm Turnbull and Minister Sinodinos very well.
“They said ‘ look, we want companies like you in Australia, and we look forward to working with you to provide the environment you need to invest here’.”
The acquisition was a two horse race, with a Korean consortium also vying for the Arrium assets.
However, Mr Hambro said it was always comforting knowing the Australian people and Government were in its corner.
“I think it was heart-warming whenever we were involved that people wanted us there,” he said.
“We are a group that has a long history of industrial growth, a very strong history of industrial turnaround, and so we were always very welcomed by the management team because I think they saw us as a safe pair of hands to steward this business onwards.