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GFG Alliance announces final concept plan for Whyalla operations Transformation

Friday 22nd December 2017

Press Release Mining

The GFG Alliance today announced the final concept plan for the transformation (the “Transformation”) of the Whyalla operations. This follows significant and detailed work undertaken by GFG following the successful acquisition of the former Arrium Australia businesses on 1 September 2017.

The Transformation is expected to structurally improve the operational and financial performance of the Whyalla Steelworks (the “Steelworks”), thereby securing its long‐term sustainability, and includes a number of initiatives across the Mining operations.

The Transformation investments include:

  • Reduction of ferrous feed costs for the Steelworks through investments in feed preconditioning, utilising latest technology;
  • Improvements in energy efficiency at the Steelworks through investments in co‐generation and the capture of process off‐gases;
  • Targeted modernisation and capacity upgrade investments across the Steelworks and the rolling mill utilising latest technology; and
  • Investments to increase production at the Steelworks by approximately 50% to 1.5 million tonnes per annum, also widening the product offering of the Steelworks and opening up high margin domestic and export markets including the global operations of the GFG Alliance.

The Transformation is expected to significantly reduce the unit cost of steel production, ensuring the Steelworks can be competitive throughout the economic cycle.

GFG estimates that the capital cost of the Transformation to be approximately $1 billion. It is expected that this will be financed through a combination of funding sources, including GFG Alliance. The Transformation will also require support from the South Australian and Federal Governments. Any Government support will be conditional on both the South Australian and Federal Governments being satisfied that the Transformation will underpin the long‐term sustainable future of the operations.

Other investments are also targeted for the Mining operations, including investments to increase iron ore reserves and looking to further unlock large scale magnetite potential. The GFG Alliance also intends to explore development of the Whyalla Port towards a world scale multi‐user facility to support not only the Steelworks and Mining operations but further economic development across the Spencer Gulf.

The GFG Alliance will now proceed with feasibility studies which will continue through 2018. The cost of these studies will be partly funded from drawing on the previously announced $50m South Australian Government grant.

Commenting on the Transformation, the GFG Alliance’s Executive Chairman, Sanjeev Gupta, said,

“We have developed a comprehensive investment concept plan for the Whyalla Steelworks and Mining businesses that will deliver a step‐change in operational and financial performance, ensuring the long‐term sustainability of both the operations and the local community.”

“We are working productively with both governments and look forward to discussions continuing in the interests of all parties involved as we progress with our further studies.”

Looking further out, Mr Gupta said, ”we strongly believe that the transformation will also provide a solid basis for our broader vision of making Whyalla a centre of manufacturing excellence.

“Through large investments in renewable energy and key infrastructure projects, we believe we can make Whyalla an attractive global hub for innovative, energy‐intensive industry”.

Whyalla Mayor Lyn Breuer welcomed the announcement, which she said would not only transform GFG’s Whyalla operations, but also the entire community.

“We are incredibly excited to hear of the progress made by the GFG Alliance during their 100‐day review,” Ms Breuer said.

“The proposed transformation of the Steelworks – together with the development of the Mining business ‐ underpins the future for the Whyalla community. “GFG Alliance’s vision for the region has the full support of the community and we continue to give them – and the South Australian and Federal Governments – our complete support.”