The Australian government is under pressure to draw up the Gupta contingency plan

The Australian government is under increasing pressure to explain contingency plans if industrialist Sanjeev Gupta fails to secure emergency funding to save metal operations that employ thousands of people.

The announcement by the UK Serious Fraud Office on Friday did just that launched a probe into GFG AllianceThe large Gupta conglomerate, for alleged fraud and money laundering, has intensified fears among thousands of Australian steel workers who had hoped a bailout deal was imminent.

Australia’s main industrial assets are a steel mill in the South Australian city Whyalla and a coking coal mine in Tahmoor.

Rex Patrick, a South Australian senator, said the OFS probe revelations “threw a seriously thick cloud on whether the group will be able to secure and retain funding”.

“Australia must not see this sovereign steelmaking capacity disappear in any case. It is important for manufacturing, national resilience and national security, ”he added.

The Gupta empire has been trying to secure new funding since March, when Greensill Capital, its main lender, fell into administration.

Hours after the SFO revealed its investigation, White Oak Global Advisors, a San Francisco-based private finance company that had been in talks to provide loans to GFG’s Australian and British steel mills, said it could no longer continue the talks.

He then appeared to trace these remarks in a new statement held in talks to refinance the Australian steel industry. Talks continue, according to people familiar with the matter on Sunday. White Oak declined to comment.

GFG has denied the wrongdoing and pledged to “fully cooperate” with the SFO probe.

Eddie Hughes, a former steel worker and now MP for South Australia, said that while there was underlying confidence in the viability of the Whyalla plant, it would be irresponsible for state and federal governments not to set plans. contingency to ensure authority companies could continue if a financing agreement did not progress.

He said it was important that the various Australian GFG companies, which include the Whyalla Steelworks, the Iron Ore Mines and Infrabuild, a steel manufacturing and recycling division, should not be split and sold separately in case GFG sank.

“Steel mills would be vulnerable in the event of a rupture and the government can play a role in ensuring that this does not happen,” Hughes said.

Credit Suisse is seeking liquidation from the Whyalla steelmaker to recover bill losses, which Greensill packed into bonds and the Swiss bank sold to its customers.

The Australian federal government and the South Australian state government, led by the Liberal Party, have so far ruled out intervening to support Gupta’s operations.

“We will not go into hypotheses. I think there has been speculation in the UK about the nationalization of private companies. But this is certainly not something the Australian government is contemplating, “Rob Lucas, South Australia’s treasurer, told the Financial Times.

The government is monitoring available information in relation to the fraud investigation in the UK, he added.

A spokesman for the Minister of Industry said the situation was under control.

In the UK, where Gupta’s steelworks employ about 3,000 people, the British steel workers’ union community described the news of the SFO’s investigation as a “relevant development” and urged that no “It would reduce the full focus of all parties to ensuring our members‘ jobs and protection of these crucial strategic companies ’.