Steel Supply Suspended Amid Fiscal Friction

In a move underscoring rising tensions, administrators of Whyalla steelworks recently halted steel deliveries to InfraBuild, a company still controlled by British industrialist Sanjeev Gupta. KordaMentha, tasked with managing Whyalla after a government seizure, imposed a “stop credit” status on InfraBuild last week. This led to a temporary pause in shipments to its distribution centres across Australia, highlighting the financial fragility of Gupta’s steel empire.

From Acquisition to Administration

Whyalla steelworks has had a tumultuous history, originally built by BHP in the 1960s and later spun off as OneSteel in 2000. It was renamed Arrium in 2012, only to fall into administration in 2016. Gupta’s GFG Alliance acquired it in mid-2017 after outbidding a private equity consortium that included South Korea’s Posco. However, in early 2025, the South Australian government seized control due to persistent financial instability, handing over operations to KordaMentha.

Supply Chain Dependency on Whyalla

InfraBuild has been a major customer of Whyalla’s output. In the year ending June 30, the company bought $272 million worth of steel billet and $154 million of hot-rolled structural steel, a combined total of 400,000 metric tons. These products accounted for around 30% of InfraBuild’s billet requirements, used in its electric arc furnaces in Sydney and Melbourne. The pause in deliveries raised alarm about supply disruptions in InfraBuild’s extensive manufacturing and recycling network.

Escalating Legal Entanglements

The financial wrangle is exacerbated by a parallel legal tussle over port access. The South Australian government passed new legislation to seize control of a port adjacent to the Whyalla plant, circumventing a Federal Court hearing scheduled for June. Gupta asserts that his GFG Alliance holds a 99-year lease on the port, escalating the dispute between the industrialist and state authorities. KordaMentha has not commented publicly on the port issue.

Mounting Losses & Creditor Pressure

InfraBuild recently disclosed a $121 million loss for the 12 months ending June 30, driven largely by a $157 million impairment linked to exposure to Gupta's businesses in Poland, the U.S., and Whyalla. This followed an earlier $81 million loss in the six months to December 31. KordaMentha has claimed that Whyalla was losing up to $1.5 million daily due to underpriced sales to related entities like InfraBuild, describing the structure as “hard-wired” for losses.

Outstanding Debts & Employee Dues

Whyalla steelworks is burdened with creditor claims totaling $1.35 billion, including $536 million claimed by GFG itself. Employee obligations remain steep, with $137 million owed to workers across the plant and associated mines. As administrators prepare the business for sale, these liabilities are expected to shape valuation and buyer interest.

KordaMentha’s Due Diligence Ahead of Sale

KordaMentha has begun examining related-party transactions and historical pricing agreements to determine causes of insolvency. InfraBuild’s reliance on Whyalla for steel billet adds complexity, as future operations may hinge on securing alternative sources or renegotiating terms with prospective new owners. The forensic financial probe is expected to shape the outcome of the impending divestment.

Industry Watchers Eye InfraBuild’s Fate

While Gupta has lost control of Whyalla, he continues to retain InfraBuild, acquired in 2016. The company operates 10 mills, distribution centres, and recycling operations, playing a key role in Australia’s steel supply chain. Industry observers are watching closely to see if InfraBuild can stabilize operations amid internal financial pressures and the growing disconnect with its former affiliate.

Key Takeaways

• KordaMentha halted steel deliveries to InfraBuild during a credit stand-off, later resolved.

• InfraBuild purchased $426 million worth of steel from Whyalla in 12 months, totaling 400,000 metric tons.

• Whyalla is losing up to $1.5 million daily, with $1.35 billion in creditor claims and $137 million owed to employees.