A subsidiary previously slated for divestment may be the key to Arrium’s continued future.
After their recent decision to place their underperforming mining and steelworks operations in voluntary financial administration, there were serious concerns for the company’s permanence. The company’s Moly-Cop business however, remains profitable and could play a critical role in their survival, according to Australian Workers Union Newcastle secretary Richard Downie.
Former administrators Grant Thorntonexpressed that it would be ‘business as usual’ for operations. However, Downie said that considering the company’s estimated $4 billion in debt, there were no long term guarantees for its employees. The company’s Waratah operations (and its Moly-Cop business) may be their last hope, according to Downie.
Arrium’s Moly-Cop companies produce rail wheels, steel grinding balls and grinding rods, and are considered one of their most profitable businesses. The company’s Mining Consumables and grinding media saw growing demand and steady profit in 2015.
There are reports the company tried to sell Moly-Cop last year in an attempt to reduce debt levels, but withdrew it from sale after failing to achieve a satisfactory price.
Former administrators Grant Thornton confirmed that they had no plans to sell Moly-Cop, however newly-appointed KordaMentha have yet to make comment.