State govt’s Whyalla port intervention sends mining contractor spiralling
A mining contractor that’s owed $113.3 million by the in-administration OneSteel has slammed the state government’s legislative intervention in a dispute over control of the Whyalla port.
ASX-listed mining firm NRW Holdings said it will have to cop a $113.3 million impairment on its financial results for the full year now that the state government’s legislative intervention in a Whyalla port dispute has passed Parliament.
In a statement, NRW – which owns mining services contractor Golding – said it was “extremely disappointed and concerned that the proposed and unprecedented intervention by the South Australian government will seriously impair and undermine Golding’s security over Whyalla Ports”.
Golding provides mining services to the in-administration OneSteel and is owed $113.3 million under its Mining Services Agreement.
The company has a first-ranking security over the assets and shares of Whyalla Ports Pty Ltd in respect of the money owed to Golding by OneSteel.
NRW said its security interest attaches to both Whyalla Ports’ assets and its contractual rights, including Whyalla Port’s rights under a lease with OneSteel.
As such, a Federal Court dispute over the validity of a lease agreement between OneSteel and Whyalla Ports is causing the company a headache.
OneSteel administrator KordaMentha went to court to make the lease agreement void and have its attempts to repossess the port declared valid and effective.
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KordaMentha argued OneSteel needed control of the Whyalla port in order to provide “an interested party clear title to the assets and business of OneSteel including mining operations, steelworks and port services”.
Whyalla Ports maintained the land was subject to a lease executed on 28 June 2018.
On Tuesday, South Australian Premier Peter Malinauskas announced the government would change laws governing the Whyalla Steelworks to ensure administrators have unrestricted access to the city’s port.
The amendment to the Whyalla Steelworks Act 1958 approves and ratifies an indenture between the state of South Australia and One Steel related to the operation of its steelworks and clarifies that a purported lease agreement between One Steel to Whyalla Ports Pty Ltd does not have legal effect.
“The Bill has been drafted out of an abundance of caution to clarify the effect of a failure to obtain prior consent and make it clear that the purported lease agreement granted by OneSteel to Whyalla Ports never had legal effect from the beginning,” the Premier said in Parliament on Tuesday.
The bill passed both houses of Parliament yesterday.
But Golding – which is party to the Federal Court proceeding – said it was “extremely disappointed” by the state government’s latest manoeuvre in its long-running battle with former OneSteel owner and billionaire industrialist Sanjeev Gupta.
“NRW is extremely disappointed and concerned that the proposed and unprecedented intervention by the South Australian government will seriously impair and undermine Golding’s security over Whyalla Ports,” the company said.
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“Further, the South Australian Government’s sudden intervention will in effect determine certain issues that are before the Federal Court for determination at a trial due to commence in less than three weeks’ time.”
The company said it was confident of a successful outcome for Golding in the Federal Court trial for a variety of reasons.
It also said: “To the extent the South Australian Government purports to say it was unaware of the lease, specifically from at least 9 July 2021, the state of South Australia has been on notice about the lease between Whyalla Ports and OneSteel”.
The company warned it might have to suffer a $113.3 million impairment on its FY25 balance sheet.
“If the Proposed Bill is passed by the South Australian Parliament in the form described in the Ministerial Statement, NRW is concerned that any recovery of the outstanding indebtedness via Golding’s first-ranking security in respect of Whyalla Ports assets will be seriously impaired,” NRW said.
NRW CEO and managing director Jules Pemberton said the company had been actively supporting the continued operations of OneSteel and Whyalla Ports.
“We continued to support the Whyalla operations prior to the appointment of KordaMentha as Administrators, despite the challenges faced by the GFG Alliance, by providing mining services and protecting the employment of hundreds of workers in regional South Australia,” Pemberton said.
A state government spokesman told InDaily that the government did “not seek to affect any matters outside of the indenture that it has granted to the operator of the steelworks, mines and port”.
“The indenture legislation creates the rights to deal with the land of the port at Whyalla,” the spokesman said.
“The legislation requires the consent of the Minister for Energy and Mining to undertake transactions such as a lease. That consent was not applied for in relation to the purported lease.
“The bill passed by both houses of Parliament yesterday reinforces this fact.
“There are matters that remain to be decided by the Federal Court that do not relate to the indenture and those will take their normal course.”
