The billionaire Stokes family’s listed investment vehicle has taken an interest in the Whyalla steelworks, once owned by British industrialist Sanjeev Gupta and now in the hands of administrators after the South Australian government moved in and seized control of the plant in February.
That interest from SGH Limited, a $20.6 billion conglomerate that owns Boral and other big industrial plays, came in the form of a recent visit to the steel mill north-west of Adelaide by chief executive Ryan Stokes and chief financial officer Richard Richards.
People with detailed knowledge of the visit – which came as sell-side adviser 333 Capital prepared to open the data room for the much-anticipated sale – said Stokes and Richards spent two days in the remote town to get a head start on proceedings. It’s early days, of course, and SGH has yet to make any decision on whether to table a bid or even what assets it’s interested in.
An SGH spokesman declined to comment.
Should SGH proceed, it is likely to be seen as a left-field contender for the operations, formerly known as OneSteel Australia and once part of the Arrium steelmaking empire that went bust almost a decade ago.
BlueScope Steel, the ASX-listed group that has been a technical adviser to the Whyalla steelworks’ administrators KordaMentha, and South Korea’s POSCO, is seen as the most logical bidder for the assets.
Those across the discussions say the Whyalla plant offers SGH the opportunity to establish itself as a steel supplier in Australia at a time when US tariffs are threatening supply chains across the world.
There’s also the opportunity to buy the asset, built by BHP in the 1960s, on the cheap and with government support lined up. On the flip side, the steelworks have been an underperformer for decades and come with significant liabilities.
Read the full story tomorrow and more on the Street Talk page.
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At an investor day last week, SGH told shareholders its debt levels were returning to normal after ballooning when it acquired Boral off the ASX. It added that it was on the hunt for M&A targets in the industrials and energy sectors that made between $100 million and $200 million in earnings and had a “turnaround pathway within 3-5 years”. The Whyalla deal could fit the bill.
