It’s been an­other big year for Bri­tish bil­lion­aire San­jeev Gupta and his global pow­er­house GFG Al­liance, with ex­pan­sions in Aus­tralia, the US and Eu­rope ce­ment­ing the com­pany as a leader in steel man­u­fac­tur­ing and re­new­ables. Mov­ing into 2019, the com­pany

The Australian Mining Review - - FRONT PAGE - EL­IZ­A­BETH FABRI

GFG Al­liance ex­ec­u­tive chair­man San­jeev Gupta has big plans for Aus­tralia with an ASX list­ing of his steel busi­ness on the cards for 2019, an elec­tric ve­hi­cle man­u­fac­tur­ing hub in the works, and a suite of min­ing and re­new­able en­ergy projects fast ad­vanc­ing.

THREE years ago GFG Al­liance ex­ec­u­tive chair­man San­jeev Gupta made head­lines for his res­cue and re­vival of a num­ber of dis­tressed met­als, min­ing, en­gi­neer­ing and power gen­er­a­tion oper­a­tions in the UK.

The ac­qui­si­tions came at a time when the UK had largely lost faith in its strug­gling steel in­dus­try in the midst of high en­ergy prices, weak global de­mand and oversupply from China.

Many were of the view the UK’s steel in­dus­try was be­yond re­pair but Mr Gupta had big­ger plans.

His hall­mark GREENSTEEL vi­sion – de­signed to se­cure a com­pet­i­tive, low-car­bon fu­ture for metal man­u­fac­ture through re­cy­cling, use of re­new­able en­ergy and ver­ti­cal in­te­gra­tion – not only saved thou­sands of jobs, it also would quadru­ple the UK’s steel-mak­ing ca­pac­ity over the next five years to 5 mil­lion tonnes per an­num (mtpa) from 1.1mtpa.

The terms “steel ty­coon”, “saviour of steel” and “man of steel” were all used to de­scribe Mr Gupta’s suc­cesses, with a num­ber of in­dus­try ac­co­lades to boot.

And while his at­ten­tion was pub­li­cally di­rected to­wards the UK and US at the time, GFG’s ex­ec­u­tive chair­man also had eyes on the Aus­tralian mar­ket.

“Aus­tralia had ac­tu­ally been on the radar for a long time,” Mr Gupta told The Aus­tralian Min­ing Re­view.

It wasn’t un­til the Ar­rium deal was on the ta­ble that GFG made its grand en­trance into the coun­try.

Ar­rium – which had been in the hands of ad­min­is­tra­tors for about a year – had strug­gled to main­tain a prof­itable busi­ness with debts of $4 bil­lion.

In Au­gust 2017, the Group – com­pris­ing in­dus­trial and met­als busi­ness Lib­erty, ship­ping in­fra­struc­ture, min­ing, en­ergy and com­modi­ties busi­ness SIMEC, fi­nan­cial ser­vices group Wye­lands, and prop­erty busi­ness Ja­hama – an­nounced Lib­erty would buy the trou­bled min­ing as­sets for an es­ti­mated $700 mil­lion.

Un­der the deal, the newly formed Lib­erty OneS­teel would make a fur­ther $1 bil­lion com­mit­ment to up­grade the Whyalla steel­works in South Aus­tralia; out­do­ing a Korean con­sor­tium that also made an of­fer.

The land­mark ac­qui­si­tion mir­rored the deals Mr Gupta had made in the UK with all the es­sen­tial el­e­ments; a dis­tressed seller, a tired in­dus­trial as­set and room to grow.

Un­der the deal, GFG Al­liance in­her­ited the 1.2mtpa Whyalla steel­works and its 10mtpa iron ore min­ing oper­a­tions in South Aus­tralia’s Mid­dle­back Ranges; Whyalla port and rail; the OneS­teel steel Scrap Re­cy­cling busi­ness; 4mtpa OneS­teel sec­ondary steel­works; Aus­tralian Tube Mills; and OneS­teel Re­in­forc­ing, ARC and OneS­teel metal cen­tres.

At the time, GFG Al­liance was less well-known by the Aus­tralian re­sources and busi­ness com­mu­nity, how­ever was wel­comed with open arms.

Mr Gupta was again la­belled a “saviour”; this time of Whyalla’s strug­gling steel in­dus­try, where hun­dreds of jobs were on the line.

“We saw the Ar­rium as­sets as a per­fect fit and there­fore the per­fect op­por­tu­nity to in­vest in Aus­tralia,” Mr Gupta said.

He added the months lead­ing up to the ac­qui­si­tion were an “emo­tional roller­coaster”.

“But it’s also when I fell in love with Aus­tralia, so it was clearly worth­while,” he said.

“It’s game chang­ing – it launched us into the main­stream in Aus­tralia, and now leads into multi-bil­lion-dol­lar, once-in-a-gen­er­a­tion in­vest­ments.”

Mr Gupta said he and his fam­ily had been based in Syd­ney since he ac­quired the Aus­tralian as­sets last year.

“My in­ten­tion has al­ways been to stay for two years un­til the busi­ness was well es­tab­lished, so we are plan­ning on go­ing back to the UK in July-Au­gust,” he said.

Spend­ing Big

Since the ac­qui­si­tion, Mr Gupta’s GFG Al­liance has amassed a huge port­fo­lio in Aus­tralia com­pris­ing the Ar­rium as­sets, and the former Glen­core-owned Tah­moor cok­ing coal mine in NSW, which would de-risk an im­por­tant feed for the Whyalla steel­works.

GFG had also pur­chased a ma­jor­ity stake in bat­tery stor­age and so­lar power com­pany ZEN En­ergy, which marked its en­trance into the Aus­tralian re­new­able space and sub­se­quent project com­mit­ments in so­lar and pumped hy­dro, as well as plans to build the world’s largest bat­tery stor­age fa­cil­ity in Port Au­gusta.

In Fe­bru­ary, GFG Al­liance’s SIMEC ZEN En­ergy com­mit­ted $1.7 mil­lion to­wards pre-fea­si­bil­ity stud­ies for its Mid­dle­back Pumped Hy­dro project.

Mid­dle­back would be a key plank in the Group’s plan to es­tab­lish 1 Gi­gawatt of ad­di­tional dis­patch­able re­new­able en­ergy gen­er­a­tion in South Aus­tralia for the Whyalla steel­works and other in­dus­trial and com­mer­cial users.

In Au­gust, SIMEC ZEN En­ergy an­nounced it would build a large 280 megawatt ( MW) so­lar plant in South Aus­tralia next year that would gen­er­ate 600 gi­gawatt hours of power per year.

On top of its Aus­tralian in­vest­ments, Euro­pean ac­qui­si­tions in re­cent months had also put the com­pany on the map fur­ther.

In Jan­uary, GFG Al­liance an­nounced it would pay $US500 mil­lion for Rio Tinto’s Alu­minium Dunkerque smelter; the group’s first sig­nif­i­cant step into con­ti­nen­tal Eu­rope.

In May, GFG’s Lib­erty En­gi­neer­ing busi­ness also picked up AR In­dus­tries (ARI); the last re­main­ing French man­u­fac­turer of alu­minium wheels.

Then the big one; GFG’s Lib­erty’s an­nounce­ment it would buy ArcelorMit­tal’s ma­jor in­te­grated steel works at Galati in Ro­ma­nia and Os­trava in the Czech Repub­lic, along with rolling mills at Skopje in Mace­do­nia and Piom­bino in Italy.

The deal, once ap­proved, would dou­ble GFG’s Lib­erty global metal man­u­fac­tur­ing ca­pac­ity.

Over in the US, GFG had also re­cently restarted oper­a­tions at the Ge­orge­town steel­works in South Carolina, which had been out of ac­tion for al­most three years.

Trans­form­ing Whyalla

Mr Gupta has made it no se­cret that his core busi­ness strat­egy is to own and man­age as much of the sup­ply chain as pos­si­ble – adding value at each stage.

His swift and clever busi­ness de­ci­sions saw him take home the ‘21st Cen­tury Icon’ prize at the ELITE Lon­don Stock Ex­change Group awards in Lon­don dur­ing Septem­ber.

“This is a great hon­our for all of us in the world­wide GFG fam­ily and I’m thrilled for us to be recog­nised in a pro­gram that specif­i­cally sets out to in­spire fu­ture gen­er­a­tions,” he said.

Mr Gupta said his cen­tral fo­cus in the com­ing years was to trans­form the Whyalla oper­a­tions, which would see an in­vest­ment of more than $2 bil­lion.

“This trans­for­ma­tion will in­clude in­creas­ing the pro­duc­tion of our pri­mary steel oper­a­tions to 2 mil­lion tonnes and be­yond; in­creas­ing our prod­uct ca­pa­bil­ity by in­tro­duc­ing new prod­ucts; es­tab­lish­ing an over­seas cus­tomer base for ex­port steel prod­ucts; in­creas­ing our iron ore re­serves; and fur­ther unlocking our large-scale mag­netite po­ten­tial,” he said.

“It also in­volves ex­plor­ing op­por­tu­ni­ties to de­velop the Whyalla Port into a world-scale, multi-user fa­cil­ity; es­tab­lish­ing ~1GW of re­new­able en­ergy gen­er­a­tion and stor­age; all while ex­plor­ing other op­por­tu­ni­ties such as cop­per, bank­ing and elec­tric ve­hi­cles.”

In Aus­tralia, GFG’s min­ing and port oper­a­tions were op­er­ated un­der GFG’s SIMEC Min­ing and SIMEC In­fra­struc­ture busi­ness, while the steel­works and OneS­teel as­sets were op­er­ated un­der the um­brella of Lib­erty OneS­teel.

SIMEC Min­ing’s projects in­cluded the Iron Baron, Iron Knob and South Mid­dle­back Ranges mines, which pro­duced hematite and mag­netite iron ore that was re­spec­tively railed and piped to Whyalla.

This year, SIMEC also re­ceived ap­proval for two min­ing leases to de­velop the Iron Sul­tan mine, which would pro­vide 600,000 tonnes of ‘cheap’ iron ore to the steel­works, and the Iron War­rior mine, ca­pa­ble of ex­port­ing up to 1.5mtpa.

“War­rior is al­ready in pro­duc­tion, while the Sul­tan tim­ing will be de­pen­dent upon up­com­ing de­ci­sions re­lat­ing to the Whyalla Steel­works Trans­for­ma­tion Project,” Mr Gupta said.

SIMEC was also com­plet­ing due dili­gence into the com­mer­cial po­ten­tial of Hav­i­lah Re­sources’ Grants and Mal­dorky projects in South Aus­tralia, which were con­ve­niently po­si­tioned near GFG’s Whyalla oper­a­tions.

Mr Gupta said “It’s still too early to spec­u­late” on the out­come of the due dili­gence, how­ever ear­lier this year Hav­i­lah Re­sources’ chief ex­ec­u­tive Wal­ter Richards said SIMEC could po­ten­tially be “the per­fect part­ner” for its iron ore as­sets.

The next phase of San­jeev’s Whyalla ex­pan­sion was a list­ing on the Aus­tralian Se­cu­ri­ties Ex­change (ASX).

GFG Al­liances’ ini­tial plan was to list on the New York Stock Ex­change, but given re­cent move­ments in South Aus­tralia, it had a change of plans.

“We’re cur­rently plan­ning to list Lib­erty Steel Aus­tralia on the ASX for now, with a tar­get of ei­ther May or Novem­ber next year,” Mr Gupta said.

It is un­der­stood GFG will con­sider list­ing all di­vi­sions, with no plans for an en­tire group list­ing.

Go­ing Elec­tric

In par­al­lel, Mr Gupta was also in the plan­ning stages of es­tab­lish­ing an elec­tric ve­hi­cle man­u­fac­tur­ing hub in Aus­tralia.

In Fe­bru­ary, ru­mours cir­cled that the group had ap­proached Gen­eral Mo­tors to buy as­sets from the closed former Holden fac­tory; a pro­posal that was re­port­edly re­jected by the car gi­ant.

Mr Gupta said the com­pany still re­mained “100 per cent com­mit­ted to elec­tric ve­hi­cles in Aus­tralia.”

“As far as a lo­ca­tion, we are still open to op­tions,” he said.

It is un­der­stood the hub would be built within the next two to three years, and would man­u­fac­ture a mod­ern light­weight elec­tric ‘ peo­ple’s car’, in­spired by For­mula One rac­ing, which would cost much less than the Tesla S model.

The oper­a­tions would be small-scale pro­duc­ing about 30,000 units an­nu­ally.

In light of GFG’s ver­ti­cal in­te­gra­tion model, Mr Gupta said the group was open to di­ver­si­fi­ca­tion into other min­er­als that were key in­gre­di­ents in the elec­tric ve­hi­cle man­u­fac­tur­ing process.

“We are cur­rently work­ing on and in­ves­ti­gat­ing cop­per op­por­tu­ni­ties, in­clud­ing the pos­si­bil­ity of a cop­per smelter at our Whyalla oper­a­tions,” he said.

Mr Gupta said the busi­ness was also open to other ac­qui­si­tions and op­por­tu­ni­ties across its di­vi­sions.

“Aus­tralia is a key fo­cus for this type of ac­tiv­ity, both or­gan­i­cally and in­or­gan­i­cally,” he said.

“It’s game chang­ing – it launched us into the main­stream in Aus­tralia, and now leads into multi-bil­lion-dol­lar, once-in-a-gen­er­a­tion in­vest­ments.”GFG Al­liance ex­ec­u­tive chair­man San­jeev Gupta.

GFG Al­liance has made a wave of in­vest­ments in the Whyalla re­gion since 2017.

Tah­moor coal em­ploy­ees cel­e­brat­ing at the launch of its oper­a­tions un­der GFG own­er­ship.

GFG Al­liance pur­chased Glen­core’s Tah­moor coal mine in April.

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