A consortium comprising Korean steelmaker Posco, Newlake Alliance Management and JB Asset Management was chosen as preferred bidder for the Arrium group of companies last month.

The GFG Alliance sale is subject to approval by the Arrium Committee of creditors, which meets next week, and the Foreign Investment Review Board, which is expected to give a decision soon.

The Korean consortium planned to invest $1.4 billion to build a steel plant that uses the Finex process developed by Posco and Austrian company Primetals. The Finex process does away with the blast furnace stage of steel production.

However, the Korean consortium wanted Australian government support to keep the existing Whyalla steel plant going during the five years it would take to build the replacement plant.

Its exclusivity period finished last Friday.

As Australia’s Mining Monthly understands it, both parties were asked to put in their best final bids and when all was considered the GFG Alliance was the better  bid because it did not require any government assistance.

It was thought it would take too long for Canberra to come to a decision on whether it would provide the assistance the Korean consortium wanted.

KordaMentha founder Mark Mentha said the GFG Alliance, owned by the British Gupta family, had submitted a modified offer for the Arrium businesses last night.

“Taking all factors into consideration, including the timeframes required to complete a sale, KordaMentha  and our sale advisers Morgan Stanley decided the GFG Alliance offer was superior to the conditional offer of the Korean alliance with whom we were negotiating,” he said.

Mentha said once the sale was completed KordaMentha would move to the next stages of the administration – finalising returns to creditors, investigating the affairs of the company and reporting to creditors.

Should the GFG Alliance deal go through it will help secure the jobs of more than 5500 Australian workers and provide a fillip the South Australian town of Whyalla desperately needs.

GFG Alliance executive chairman Sanjeev Gupta was recently feted at the Global Metals Award as the CEO of the year for Liberty’s 18-month effort to invest more than £500 million to buy and turn around metals, energy and engineering operations across the UK, saving more than 5000 jobs.

Gupta said he had a vision to create a vertically integrated and sustainable industrial business that encompassed mining, metal recycling, primary metal production, engineering and distribution.

He said it would also use renewable energy consistent with the GFG Alliance’s Greensteel strategy.

“The Arrium business fits perfectly with this strategy and we believe it has an exciting future leveraging our Greensteel vision, which has been well proven in the UK,” Gupta said.

“Looking forward we will continue to explore opportunities to further grow our presence in Australia in adjacent and complementary industries, including renewable energy, metals and mining.”

This could bode ill for BGC Contracting, which has the mining contract for Arrium’s iron ore operations.

BGC may be replaced by GFG Alliance member Simec, which conducts mining operations.

GFG Alliance development director Michael Morley said the alliance had developed a comprehensive plan to secure the long-term future of the Whyalla Steelworks.

“Our plan focuses on reducing the cost of iron ore feed, targeted modernisation investments, energy generation, expanding production and creating high value export opportunities,” he said.

“We are particularly excited by the opportunity for the Whyalla Steelworks to directly supply intermediate steel products to our UK rolling mills that are currently sourced from third parties.

“While our plan remains subject to reaching agreement with government, we have had regular and constructive discussions with both the federal and South Australian governments throughout the sale process and we look forward to continuing those discussions now the acquisition has been agreed.”