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Refinancing a Bankrupt Business at Taxpayer Expense Part II

Published: (Updated: ) in Australian News by .

Prisoners of a Smelting Fortune In August 2020 Mr Sanjeev Gupta’s GFG Alliance agreed to purchase Tasmania’s loss-making TEMCO smelter at Bell Bay Tasmania as an addition to his global collection of struggling steel and aluminium manufacturing plants. It was a deal in part funded by the public purse under the threat of job losses. […]

Prisoners of a Smelting Fortune

In August 2020 Mr Sanjeev Gupta’s GFG Alliance agreed to purchase Tasmania’s loss-making TEMCO smelter at Bell Bay Tasmania as an addition to his global collection of struggling steel and aluminium manufacturing plants.

It was a deal in part funded by the public purse under the threat of job losses. The purchase would make Gupta one of the largest customers of Hydro Tasmania a Tasmanian government business enterprise owned by We The People.

Sanjeev Gupta: “While living in Australia, I visited Tasmania a number of times and was impressed by its natural beauty, its commitment to renewable energy and the diversity of its industries. Most of all I was inspired by the Tasmanian Government’s passion for green industry and underpinned by long-term, sustainable and quality jobs…The welcome and encouragement the government extended to me to invest in Tasmania, played no small part in the conclusion of this agreement today. I’m certain it will lead to GFG taking a leading role in the future development of industry in Tasmania… I am passionate about industrial communities with a long heritage, their commitment to see their facilities succeed is a testament to the human spirit. I look forward to visiting George Town again as soon as possible,” Gupta said.

Asked if he saw an opportunity to strike a cheaper power bill for TEMCO, Gupta said; “Yes absolutely, we are very excited about the energy opportunities in Tasmania, both for TEMCO and beyond…we will definitely be looking to see how we can harness that opportunity.”

He claimed a close relationship with Hydro Tasmania and I suggest that therefore by extension our complicit state and federal Liberal governments.

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”We have good relations with Hydro Tasmania, and we are exploring all sorts of opportunities with them,” he was quoted as saying.

Gupta said the purchase of TEMCO was designed to make his Australian steel assets, which include South Australia’s Whyalla steelworks and smaller mills in Sydney and Melbourne, more integrated and competitive.

In January 2021, the sale of the TEMCO smelter at Bell Bay was finalised with assurances given that the jobs of the 250 people employed there with their entitlements were safe. Gupta’s “GFG Alliance already produces the lowest carbon aluminium in the world in both the UK and France…Our goal is to be carbon neutral by 2030 and I am proud to invest in a state like Tasmania which has a plentiful supply of renewable energy resources.”

Meander Valley Councillor and Bell Bay Advanced Manufacturing Zone chief executive Susie Bower stated: “The signing and closing of the deal means it is set in writing. People can get on with their lives as there is no uncertainty…the deal also provided certainty to businesses who had contracts with the plant – many of them having provided services over 35 years.”

The smelter has been renamed LIBERTY Bell Bay after LIBERTY Steel Group, part of the GFG Alliance.

Over the weekend Liberty Steel came under siege: the Liberty Bell was tolled with the implosion of Greensill, the finance firm behind Gupta’s Liberty Group.

Founded by former banker Lex Greensill, the eponymous group was plunged into crisis last week after its main insurer refused to renew a $US4.6b contract and Credit Suisse froze $10b of funds linked to the company. Private equity firm Apollo remains in talks to buy parts of the business.

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Greensill has now filed for insolvency in the United Kingdom.

Documents at UK Companies House show Greensill took additional security over the shares in holding companies above Gupta’s Australian assets on Monday. The Australian Financial Review reported that GFG Alliance and Greensill declined to comment.

Bloomberg reported that in the Monday court filing, Greensill said that its largest customer by value has fallen into ‘severe financial difficulty’. In a Feb. 7 letter, GFG said that if Greensill Capital “ceased to provide working capital finance to GFG, then GFG would collapse into insolvency,” according to the filing.

I suggest the politicians who fuelled Gupta’s rocket like ascent in an attempt to prevent job losses and avoid the political cost will now be badly burned by a fiery descent.

In the London Sunday Times this past weekend one paragraph sums up the state of the Gupta play: “The relationship between Greensill and the Indian-born magnate has been one of co-dependency. Gupta, 49, is said to have warned if things ever went wrong for him, it would mean mutual assured destruction for Greensill. At heart it is a story of greed, financial alchemy, industrial decay and politics.”

If only the government of Tasmania had the political fortitude to build a prison at Longreach instead of Westbury, then Bridget Archer and her Liberals would have come out of this shining under a golden star. To get Archer elected and gain government they backed the former mayor to ensure that a prison would never be built at George Town.

At Westbury another Archer and her team of minions are trying to build a prison in a public nature reserve.

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And all this is despite the fact that they cannot find enough people to monitor less than a dozen young people incarcerated in the Ashley Youth Detention Centre five miles down the road. Since 2015, there have been 95 workers compensation claims at Ashley. 72 were physical claims and 23 were psychological, for a total compensation cost $3,681,726. There are currently believed to be 12 minors detained in the facility. (ABC under Freedom of Information.)

On current indications the Liberals may soon have 250 badly-burned smelter operatives looking for a job.

A local job could be found if a prison was to be built on the former Gunns pulp mill site at Longreach.

John Hawkins has lived in Tasmania for 17 years. He has recreated with his wife Robyn a 19th century landscape over the Bentley Estate at Chudleigh. He is interested in the Tasmanian way of doing business. John was commissioned into the Diehards from Sandhurst in 1962.

JOHN HAWKINS: Westbury Prison – Part 2.

JOHN HAWKINS: Refinancing a Bankrupt Business at Taxpayer Expense.

Source: Tasmanian Times

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