Media release – GFG Alliance, 13 August 2020
Sanjeev Gupta’s GFG Alliance to acquire Tasmania-based TEMCO
GFG Alliance has today confirmed that it has entered into a binding sale and purchase agreement with an entity owned by South32 Limited and Anglo American Plc for the hydro energy-powered Tasmanian Electro Metallurgical Company (TEMCO) smelter in Bell Bay, near George Town in northern Tasmania.
Subject to relevant approvals, TEMCO will join LIBERTY Steel Group, part of the GFG Alliance family, which includes the Whyalla steelworks, SIMEC Mining, and InfraBuild in Australia. This will secure the site’s 250 jobs.
The TEMCO facility has four submerged electric arc furnaces, including a sinter plant and has the capacity to produce around 150ktpa of high carbon ferromanganese and 120ktpa of silicomanganese which is used in the production of steel.
LIBERTY Steel Group, eighth largest steelmaker in the world outside China, purchases a significant volume of ferro alloys every year for its global steelmaking operations. TEMCO is an existing supplier to LIBERTY’s Australian operations.
GFG Alliance Executive Chairman, Sanjeev Gupta said the TEMCO facility will be an important upstream addition that will strengthen its steel making capability in Australia and globally.
“This acquisition will further enhance LIBERTY’s drive to be self-sufficient and fully integrated across the supply chain, complementing our iron ore production in Whyalla, coking coal in Tahmoor and our Cultana Solar Farm to be built in Whyalla.
“By investing in key inputs, such as ferromanganese and silicomanganese we are able to generate value across the supply chain to ensure Australia has a sustainable and globally competitive steel manufacturing sector.
“It will also help neutralise the volatility in the markets, providing us a reliable supply at a stable cost.
Mr Gupta said the acquisition is in line with his strategy to further expand his GREENSTEEL strategy and complements his goal to be carbon neutral by 2030, known as CN30.
“By embracing Tasmania’s plentiful supply of renewable energy, particularly the ability to power the submerged arc furnaces from Hydro Tasmania, the TEMCO facility will support our goal to be carbon neutral by 2030.
“Whether used in a blast furnace route or an electric arc furnace route, ferromanganese and silicomanganese will continue to have a role as important inputs for making steel products, the fact we will be able to produce these inputs using renewable energy is a real boost to our GREENSTEEL strategy.
“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,” Mr Gupta said.
Robert Evans, General Counsel and Head of Business Development at GFG Alliance who led this transaction, grew up in Tasmania and has firsthand knowledge of how important TEMCO and other similar manufacturers are to the local economy, said: “It’s most rewarding to be involved in a transaction by which GFG can ensure the sustainable future of this business and establish a platform in Tasmania for future growth and investment”.
The agreement remains subject to regulatory approval.
About GFG Alliance – GFG Alliance is a collection of global businesses and investments owned by Sanjeev Gupta and his family. The Alliance is structured into three core industrial pillars; LIBERTY Steel Group, ALVANCE Aluminium Group and SIMEC Energy Group, independent of each other yet united through shared values and a purpose to create a sustainable future for industry and society. GFG Alliance employees 35,000 people, across 30 countries and has revenues of USD $20bn. GFG Alliance is a leader in sustainable industry with a mission to become Carbon Neutral by 2030.
Media release – South32, 13 August 2020
AGREEMENT TO DIVEST TASMANIAN ELECTRO METALLURGICAL COMPANY
South32 Limited (“South32”) is pleased to announce that Groote Eylandt Mining Company (GEMCO), owned by the
Samancor Manganese joint venture (JV), has entered into a binding agreement for the sale of its shareholding in the
Tasmanian Electro Metallurgical Company (TEMCO) to an entity within GFG Alliance (GFG).
Completion of the transaction is subject to approval from Australia’s Foreign Investment Review Board. Upon
satisfaction of this condition, GFG will make a nominal payment to GEMCOto acquire 100% of the shares in TEMCO.
As a condition to the completion of the transaction, the parties have entered into an ore supply agreement from GEMCO
to TEMCO.
South32 CEO Graham Kerr said the agreement represented another milestone for South32 as it continues to reshape
its portfolio.
“Today’s agreement follows an extensive review of options regarding the future of our manganese alloy business. The
transaction and our ongoing supply of ore to TEMCO will see the smelter, first established in 1962, continue to operate
into the future,” Mr Kerr said.
“TEMCO has a proud history of being a significant contributor to the local economy and we’re pleased to have achieved
what we believe is a positive outcome for our people, the local community and Tasmania. I would like to thank our
workforce for their patience and dedication to continued safe operations throughout the review process.”
“Looking forward, we are confident that GFG, a current TEMCO customer, is well placed to operate the smelter, with
the acquisition representing an opportunity to further vertically integrate its steel business.”
The transaction does not include the Samancor Manganese JV’s South African manganese alloy smelter, Metalloys,
which has separately been placed under care and maintenance.
Samancor Manganese JV
The Samancor Manganese JV is owned 60% by South32, with the remaining 40% held by Anglo American Plc.
Accounting and tax
TEMCO is currently equity accounted by South32 and its share of profit or loss after tax will continue to be reported in
the Group’s Underlying results until sale completion. On conclusion of the transaction GEMCO’s shareholding in
TEMCO, including all associated assets and liabilities, following a net working capital completion adjustment, will
transfer to GFG.
South32 does not anticipate reporting a taxable profit on the transaction.
About South32
South32 is a globally diversified mining and metals company. Our purpose is to make a difference by developing natural
resources, improving people’s lives now and for generations to come. We are trusted by our owners and partners to
realise the potential of their resources. We produce bauxite, alumina, aluminium, energy and metallurgical coal,
manganese, nickel, silver, lead and zinc at our operations in Australia, Southern Africa and South America. With a focus
on growing our base metals exposure, we also have two development options in North America and several partnerships
with junior explorers around the world.
Media release – Bridget Archer MP, Federal Member for Bass, 13 August 2020
Statement on purchase of TEMCO – South 32
The purchase of TEMCO – South 32 by Sanjeev Gupta’s GFG Alliance provides certainty for hundreds of northern Tasmanian families.
As resident in the George Town community I know first-hand the relief this will bring to the approximately 300 employees of the George Town plant and to the local economy.
During the 12 months since being elected to federal parliament and previously as Mayor of George Town, I have been working closely with stakeholders, including the state government on securing a future for the plant.
I congratulate the state government, particularly Minister for State Growth Michael Ferguson for his tireless work in bringing stakeholders together leading to this positive outcome.
Media release – Michelle O’Byrne MP, Labor Member for Bass, 13 August 2020
TEMCO purchase welcome news
Labor welcomes today’s announcement that all 250 jobs at TEMCO’s Bell Bay smelter will be secured by its new buyer.
Labor Member for Bass Michelle O’Byrne said this puts an end to months of uncertainty for the community.
“We know many workers at the smelter were concerned about their job security, and the news all jobs are assured is welcome relief.
“The smelter is a major regional employer, and the financial security provided to workers will see a flow on effect in the local economy.
“What’s needed now is for government to gain an assurance that local businesses will also benefit from the infrastructure investment, and that work will not be contracted out to interstate companies.
“This is not a signal that the government can afford complacency around protecting every existing Tasmanian job, or creating new jobs in the state.
“Labor’s COVID-19 Recovery Package outlines clear plans to get Tasmanians into jobs, including free TAFE courses to retrain workers pushed out of their positions.
“We urge the government to do more than pin its hopes on an infrastructure program to create the jobs Tasmanians need now.”
Media release – Peter Gutwein, Premier, Michael Ferguson, Minister for State Growth & Guy Barnett, Minister for Resources, 13 August 2020
TEMCO agreement welcomed
The Tasmanian Liberal Government welcomes the announcement by South 32 Limited (South 32) that Groote Eylandt Mining Company (GEMCO) has entered into a binding agreement for the sale of its shareholding in the Tasmanian Electro Metallurgical Company (TEMCO) to GFG Alliance (GFG).
Premier Peter Gutwein said this was a very good outcome for Tasmania given TEMCO’s Bell Bay manganese alloy smelter plays an important role in the State’s economy, especially in northern Tasmania.
“As a major regional employer, the securing of the ongoing operation of the smelter and the site’s 250 jobs, will be very welcomed by TEMCO employees and the broader community,” he said.
“As we build ourselves out of the COVID-19 pandemic, it is crucial business confidence remains strong to secure ongoing investment in Tasmanian industry and jobs, and today’s announcement will support that.”
Minister for State Growth Michael Ferguson said the Tasmanian Liberal Government, through the Coordinator-General, worked hard last year to bring GFG to Tasmania to introduce a range of potential investment opportunities, including TEMCO.
“While the acquisition will require regulatory approvals and consents, we are pleased that GFG’s detailed due diligence has provided it with the confidence to invest in Tasmania, and we look forward to TEMCO remaining a key player in the Tasmanian economy employing a significant number of Tasmanians,” he said.
Minister for Resources and Energy Guy Barnett said it is clear that TEMCO will become a key component of the group’s steel making capability in Australia and globally.
“It is no surprise that Tasmania’s world leading renewable energy credentials were a key consideration, helping support GFG Alliance’s goal to be carbon neutral by 2030,” Mr Barnett said.
“The Government recognises the mining and mineral sector is a cornerstone of the Tasmanian economy, injecting billions into Tasmania and providing thousands of jobs, many in regional areas.”
