A bit of light reading if anyone is interested....

A bit of light reading if anyone is interested.


https://www.abl.com.au/MediaLibraries/ABL/sites/Arrium/VID792/Reasons-for-judgment-JDavies.pdf

There are many other pdfs in the link below
https://www.abl.com.au/Arrium/Court-Proceedings/Court-Proceedings

The OneWhyalla business has experienced severe financial under performance since 2014 and made an EBITDA loss of $261 million in FY15 and an EBITDA loss of $84 million in FY16. The administrators have been taking action to implement cost reductions and increased efficiencies in the OneWhyalla business to enhance its longer term viability and maximise the possibility of a going concern recapitalisation or sale of the mining operations consistent with the objects of Part 5.3A of the Act. As part of these actions, the administrators have formed the view that it is in the best interests of OneSteel Manufacturing Pty Ltd (administrators appointed) (“OneSteel Manufacturing”) in its capacity as one of the Arrium Administration Entities that owns and operates the OneWhyalla business’ mining operations, to install two low grade iron ore beneficiation plants at OneWhyalla’s mining sites at Iron Knob and Iron Barron near Whyalla in South Australia (“the Beneficiation Plants”). The investment in the Beneficiation Plants would allow the OneWhyalla Business’ mining operations to process and blend low cost/low grade ores with higher grade process ores to support OneWhyalla’s market offering at 58% Fe grade index and are considered - 2 - critical to enabling the OneWhyalla business’ mining operations to target high grade ore export sales at 10 Mtpa. This initiative was considered and supported by the board of OneSteel Manufacturing before the company was placed into administration. The administrators have reviewed the Arrium Group’s estimate of the likely economic benefit of the installation of the Beneficiation Plants to the OneWhyalla business which they consider appropriate. It is estimated the Beneficiation Plants will contribute an additional $241 million in positive cashflow ($180 million taking into account capital expenditure cost) over the 5 year period FY17 to FY22, with a net present value (employing a 10% discount rate) of $122 million. If the Beneficiation Plants are not implemented into OneWhyalla’s mining operations, the mining operations are forecast to be cash-flow negative. 4 The administrators believe that the purchase and commissioning of the Beneficiation Plants are crucial to the administrators’ strategy to address the current loss making situation and return the OneWhyalla business to being cash-flow neutral or marginally cash-flow positive and demonstrate longer term viability. The administrators believe that these initiatives and outcomes will make the OneWhyalla business more likely to be sold or recapitalised as a going concern successfully. The administrators predict that without the Beneficiation Plants OneWhyalla’s mining operations will continue to trade on a negative cash-flow basis and may need to cease operations in the near term. The closure of the OneWhyalla business would crystallise substantial contingent liabilities, including employee redundancy and leave liabilities estimated at $164 million, and would potentially leave 3,400 people unemployed, amongst other likely damaging consequences. 5 In order to finance the purchase, construction and installation of the Beneficiation Plants (which will cost around $50 million), the administrators sought and obtained a limited recourse funding commitment from the Commonwealth Government for the capital investment. The lender will be Export Finance and Insurance Corporation (“EFIC”) and the amount to be lent is $49.2 million (“the EFIC Loan”).