By Paul Ploumis
July 06, 2017 02:30:08 PM’
SEATTLE (Scrap Monster): A consortium owned by the UK-based Gupta family has signed a binding agreement to purchase the assets of the struggling Australian steel and mining group Arrium. The British GFG Alliance owned and controlled by Gupta family has agreed to purchase most of the Arrium assets in a deal worth $700 million. The deal is expected to bring new life to Arrium, which has been in receivership for more than one year.
GFG emerged as the top bidder, defeating its nearest rival group from Korea. GFG Alliance, which had initially made a low quote in May this year, had to revise their offer twice by increasing the bid price. The second offer made this Saturday was accepted after its Korean rival’s conditional offer was rejected. The binding agreement is subject to review by Arrium’s committee of creditors and pertinent regulatory agencies. Upon those approvals, the sale of assets is expected to complete during the month of August this year.
According to sources, the sale includes several of Arrium’s assets including its Australian iron ore mining operations, mainly in South Australia. Also included are the 1.2 million metric tons per year Whyalla Steelworks, adjoining port and rail infrastructure. GFG Alliance will also acquire One Steel Recycling which operates more than 20 scrap processing facilities across Australia. Also included in the sale are the three bar and rod rolling mills in Sydney, Melbourne and New Caste that operates under OneSteel Secondary Steelworks. Arrium will also sell its Australian steel tube mills and fabrication units as part of the deal.
Commenting on the acquisition, Sanjeev Gupta, executive chairman of the GFG Alliance stated that the takeover of Arrium assets is in line with the company’s proven strategy to create vertically integrated and sustainable business by bringing various portfolios such as mining, metal production, metal recycling, production and distribution all under one umbrella. The group had successfully employed the same strategy in the UK, by bringing together several businesses and engineering solutions under one head.
South Australian Premier Jay Weatherill who held discussions with officials from GFG Alliance stated that the acquisition is good news for more than 1500 workers and the entire Whyalla community. Weatherill noted that the new buyer intends to grow the business in Whyalla by making fresh investments. This in turn is expected to create more employment opportunities in the region, he added. Meantime, Sanjeev Gupta noted that it requires significant investments to upgrade the plant. He expressed confidence that the investments would make the business profitable and sustainable.
Arrium Limited is an international diversified mining and materials company listed on the Australian Securities Exchange, with two key business segments: Arrium Mining, and Arrium Steel. The recycling business, which is also a part of Arrium Steel, has operations in Australia and Asia.