Legislative remedy can’t cure costs biff

The administrators of Onesteel Manufacturing Pty Limited (OneSteel) would have been confident amendments made last month to the Whyalla Steelworks Act 1958 ended uncertainty around who controls Onesteel’s port facilities at Whyalla, and they have. Just not soon enough to prevent a cross claim and a stoush over costs.

The amendments were necessary to remove all doubts around the port in circumstances where Whyalla Ports Pty Ltd, an entity forming part of former steelworks operator GFG Alliance asserted an interest in the port on the basis of a 2018 lease the administrators believed was invalid.

Sanjeev Gupta’s GFG Alliance was relieved of the burden of the loss making steel works in February when South Australian premier Peter Malinauskas moved to seize control and appoint Sebastian Hams, Mark Mentha, Lara Wiggins and Michael Korda as administrators.

The impulse to nationalise melded with the powers of the Corporations Act to create one big beautiful bail out.

The efficacy of belief however was limited without a legislative cure or a court order and given the $400 million in indemnities the VAs have been bequeathed to keep the metal molten and mills rolling it was inevitable the KordaMentha foursome would seek to cover their arses via a declaration from the courts.

To not do so would’ve meant placing hard won reputations in the hands of the South Australian parliament, as fickle a parcel of MPs as this nation has spawned, Tasmania excepted.

But whilst the amendments allowed the administrators to have unfettered legal control they didn’t address the issue of secured rights to the port infrastructure granted by Whyalla Ports Pty Limited to mining contractor Golding, which claims it is owed $113.3 million for mining services provided to Onesteel and asserts security over the Port’s infrastructure in relation to that sum.

Once the legislative amendments were passed the administrators sought to discontinue their application for a declaration that the lease was void, unenforceable and had no legal effect. While it seems that application will be granted unopposed Golding has commenced a cross claim in respect of its asserted security.

Federal Court judge David O’Callaghan heard yesterday that the question would boil down to whether the relevant port assets to which Golding clings are chattels or fixtures. Barring a settlement the matter will be heard in July.

Also preventing the administrators from concluding the dispute is the question of costs in respect of the discontinued lease application.

The administrators want it decided without another hearing. The defendants – Golding and Whyalla Ports Pty Limited – have yet to consent.