Rio has already asked the Tasmanian government for a power price discount to keep open the loss-making Bell Bay smelter, which is located barely one kilometre away from TEMCO.
Mr Gupta said he wanted to play ”a leading role in the future development of industry in Tasmania”, and did not rule out buying Rio’s smelter.
”There is no discussions on that at the moment and I can’t really speculate on what the future will hold,” he said.
Rio chief Jean-Sebastien Jacques said last month that his requests for a power discount were not unreasonable.
“We are not asking for something which is unreasonable we are just asking for a price which is globally competitive,” he said on July 31, in reference to talks with Australian power utilities.
“I can see the profits of the utility provider in NSW or in Tasmania, so on and so forth, what we are just asking for is a competitive and reliable source of power in order to make sure we continue to produce aluminium and employ lots of people in Tasmania or Gladstone or Tomago.
”Those assets require lots of investment going forward and we are ready to do so but you can only do it if you are in the position of profitability.”
Mr Gupta said the purchase of TEMCO was designed to make his Australian steel assets, which include South Australia’s Whyalla steelworks and smaller mills in Sydney and Melbourne, more integrated and competitive.
Those steel assets already purchase ferro alloys from TEMCO as an input to the steelmaking process.
“By investing in key inputs, such as ferromanganese and silicomanganese we are able to generate value across the supply chain to ensure Australia has a sustainable and globally competitive steel manufacturing sector,” said Mr Gupta.
“It will also help neutralise the volatility in the markets, providing us a reliable supply at a stable cost.”
Mr Gupta declined to comment in April when asked to confirm that his alliance of companies was in talks to buy the TEMCO asset.
South32’s broader manganese alloy business, which includes TEMCO and a South African smelter, lost $US12 million in the first half of fiscal 2020 before interest and tax, and TEMCO is understood to be the weaker of the two assets.
In reference to those losses, the chief executive of one rival manganese producer privately told The Australian Financial Review in April that ”I doubt anyone would be interested in such assets”.
The deal requires approval from the Foreign Investment Review Board to be finalised.
If GFG can finalise purchase of TEMCO, it would mean the smelter and the Whyalla steel works are once again united under a common owner after 18 years apart.
Both assets were owned by BHP until Whyalla was demerged into OneSteel in 2002, and TEMCO demerged into South32 in 2015.
But Mr Gupta said vertical integration was a core part of GFG’s business model.
“Whether it is minerals, energy or downstream production, we have been a strong believer in owning our own system,” he said.