South Australia’s energy minister has travelled to Italy to “eyeball” the firm tasked with developing a $500 million furnace for the Whyalla steelworks as pressure mounts on the global metals empire of the plant’s owner Sanjeev Gupta.

Mr Gupta’s company GFG Alliance signed a deal in April last year with equipment maker Danieli for a new electric arc furnace for its Upper Spencer Gulf facility.

Tom Koutsantonis is in Europe seeking an update on the project directly from the manufacturer, which is based in Italy’s north-east.

Tom Koutsantonis is sending a team of experts to Whyalla.(ABC News: Che Chorley)

“I want to eyeball Danieli,” he told ABC News.

“I want to know where it’s up to, how far away is it, where are we with integration, engineering and design.”

The state and federal governments have committed more than $110 million to the project.

It is a crucial part of Mr Gupta’s plans to decarbonise his Whyalla steel-making operations by 2030.

Danieli has told ABC News the contract with the Whyalla steelworks is in place and engineering work is proceeding.

But the Italian manufacturer is building more than one electric arc furnace for GFG, and the other one is facing major challenges.

Danieli has “suspended” the contract to build a similar furnace for GFG’s steel plant in the Czechia, Liberty Ostrava, amid a dispute over an unpaid power bill.

The plant’s energy supplier, Tameh Czech, cut electricity to the facility last December, accusing Liberty Ostrava of missing payments since June.

Tameh Czech has told the ABC Liberty owes it $130 million.

Liberty has proposed a restructuring plan, which it said had the support of 90 per cent of its creditors.

Tameh Czech “disagrees with the plan” and said the “correct and logical step, which corresponds to Liberty Ostrava’s current financial situation, is its insolvency”.

GFG companies under investigation in UK

The problems in Czechia are not the only business concerns Mr Gupta has in the region.

Sanjeev Gupta at the Whyalla steelworks production line in 2017.(ABC News: Nick Harmsen)

GFG Alliance owes around $889 million to the administrators of the collapsed supply chain finance firm Greensill Capital.

In March, the administrators revealed GFG had not made repayments in three years, and warned it may consider “recovery options” if a restructuring plan could not be agreed to and implemented.

A spokesperson for GFG said the company had signed a new framework agreement with its major Greensill creditors. 

The company insists its Australian businesses are not exposed to any Greensill-related debt. 

Some of GFG’s companies in the UK also remain under investigation by Britain’s Serious Fraud Office (SFO) for “… suspected fraud, fraudulent trading and money laundering within the GFG Alliance, which includes examining its financial agreements with Greensill Capital,” an SFO spokesperson said.

GFG has “consistently rejected any wrongdoing” and pledged to “cooperate fully” with the investigation.

Back in Whyalla, the existing blast furnace at the steelworks has been offline since mid-March, with repair works set back again last week when a “break out” occurred, cracking part of the outer shell.

Premier Peter Malinauskas told parliament this week the state government now expects operations to resume by July.

“The last couple of months have probably been the most challenging for the team in Whyalla,” Mr Gupta said at the World Hydrogen Summit in the Netherlands this week.

“I’m very confident the blast furnace will be back; we need it for our transition [to green steel].”

“Of course, our future is the DRI (direct reduction plant) project, but that will take us three years to complete and during this time we need our blast furnace running and serving our needs,” he said.

Transition to green steel now expected in 2027

The DRI project is another part of Mr Gupta’s plan to phase out coal-based steelmaking at Whyalla.

The plant will process magnetite iron ore that can then be fed into the electric arc furnace.

In recent days, GFG Alliance received positive results from testing of Whyalla magnetite in direct reduction iron plants in Canada and Egypt.

“Both of them yielded the best results the industry has seen so far,” Mr Gupta said, “proving that Whyalla’s magnetite really is the best in the world”.

Until this week the “transition” to green steel was planned for 2025, but GFG now expects the shift to happen in 2027.

The steelworks owner plans to decarbonise the plant by 2030.(Australian Story: Ben Cheshire)

The company also wants to use hydrogen to help power the electric furnace and DRI plant, which would be sourced from a large-scale plant the state government is building outside of Whyalla.

“We’re doing it there for a reason,” Mr Koutsantonis said.

“It’s alongside magnetite resources and it’s alongside a steelworks, and we want to decarbonise steel.

“The first one to decarbonise steel — it’s a path to prosperity.

“We’re not ready to transition to an electric arc furnace, this blast furnace needs to survive, and the government’s entire strategy in Whyalla has always been about keeping that blast furnace hot,” he said.

Hundreds of jobs rely on the steelworks operating.(ABC: Michael Dulaney)

There are also hundreds of jobs that rely on the steelworks operating.

Many of the 1,100-strong workforce at the Whyalla plant are on about 30 per cent less pay while the furnace remains offline.

GFG Alliance has said employment arrangements would return to normal once the steelworks is operating as usual again.