British Billionare Sanjeev Gupta has taken one step closer to becoming a carbon-neutral steelmaker with the acquisition of the Tasmanian Electro Metallurgical Company (TEMCO).
The magnese alloy smelter, which employs 250 people, was previously owned by South32, who had been aiming to mothball, sell or close the company following a change in global markets.
South32 have now entered into a binding agreement with Mr Gupta's company GFG Alliance to sell TEMCO, which will become part of Liberty Primary Steel.
The acquisition is important for Mr Gupta because the TEMCO facility produces ferromanganese and silicomanganese, two key ingredients in speciality steel products.
A GFG spokesperson said this upstream expansion would help ensure supply into the company's global network, including Whyalla.
"The acquisition will also help further stabilise our Australian steel-making facilities by removing the volatility in the ferromanganese and silicomanganese markets, providing us a reliable source at a stable cost," they said.
The sale also bodes well for Mr Gupta's plan to become a carbon-neutral steelmaker by 2023, through sourcing carbon-neutral inputs into steel production at the Whyalla Steelworks.
South32 CEO Graham Kerr said the agreement represented another milestone for South32 as it continues to reshape its portfolio.
"This 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."