UK's GFG looks to manufacture electric vehicles in Australia

January 22, 2018

He has been lauded as the saviour of the British steel industry. Now UK industrialist Sanjeev Gupta has set his sights on reviving another supposedly dying industry: car manufacturing in Australia.

On Monday the South Australian government revealed that GFG Alliance, the Gupta family’s privately owned conglomerate, has lodged a bid to buy some of General Motors’ assets in Adelaide and begin manufacturing electric vehicles.

The move comes just months after GM ceased car manufacturing at its Holden factory in Adelaide, closing the curtains on a century-old industry in Australia.

“We are incredibly excited and supportive of the GFG Alliance’s bid and subsequent plans to ensure the continuation of our very proud history of automotive excellence and innovation in South Australia,” Tom Koutsantonis, South Australia’s treasurer, wrote in a letter to GM Holden.

He said GFG Alliance planned to develop the Holden site in the suburb of Elizabeth as a manufacturing base for electric vehicles using technology developed by its partner, Gordon Murray Design. Mr Koutsantonis asked GM to consider GFG’s offer, saying it could place South Australia at the forefront electric vehicles industry.

GFG Alliance and Holden declined to comment on GFG’s offer. Holden was due to begin auctioning assets at its Adelaide facility on January 19.

When Tata put its UK steel empire up for sale in early 2016, Mr Gupta emerged from relative obscurity as a white knight to save UK steelmaking.

But he is also is well known in Australia, where in 2017 he bought the troubled steel company Arrium from administrators — a move that saved the Whyalla steelworks in South Australia from closure.

This month he bought Glencore’s Tahmoor coking coal mine as part of his strategy to create a fully integrated business in Australia, ranging from raw materials and energy right through to high-end finished products ready for market.

A few days later GFG bought Europe’s biggest aluminium smelter in Dunkirk, France, from Rio Tinto for $500m as part of a €2bn plan to build a business in northern France producing components for the automotive industry.

The purchasing spree has raised some questions about how the deals are financed.

Mr Gupta told the Financial Times that his group has “no significant debt” at the corporate level and would consider stock market listings for individual assets, although not the whole business.

Reviving the car industry in Australia, which has higher labour costs than Asian competitors including China and Thailand, could prove difficult. GM, Toyota and Ford have all bowed out of Australian car manufacturing in recent years, citing high labour costs, the country’s small market and a volatile currency.

But some manufacturing experts say the GFG plan could work for electric vehicles given the ready availability of motor industry skills and Australia’s abundance of raw materials.

“This is absolutely possible because the car design and manufacturing expertise is still here,” said Roy Green, who is a board member of Australia’s Innovative Manufacturing Cooperative Research Centre. “Labour costs are not such an issue due to highly automated manufacturing technology.”

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