Thursday, December 15, 2016

News: Positivity from prospective purchaser of Rotherham steelworks

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Sanjeev Gupta, executive chairman of the Liberty House Group, is confident that capacity of Tata Steel's Rotherham site can be increased five-fold if the proposed £100m deal for the Speciality Steels business goes through.

At the end of March, Tata Steel concluded that it was exploring all options for portfolio restructuring including the potential sale of Tata Steel UK, in whole or in parts. Following a board meeting in July, the steelmaker decided on a separate process for the potential sale of its Speciality Steels business, which until recently employed over 2,000 people at sites like Aldwarke in Rotherham and Stocksbridge in Sheffield.

Liberty House and Tata Steel announced in November that a letter of intent had been signed and that they expect the acquisition of the speciality steel business in its entirety, including the two businesses in Rotherham (at Aldwarke and Brinsworth Strip Mill), to complete early in the first quarter of 2017.

The acquisition would secure the jobs of around 1,700 steel-workers at major production facilities in Rotherham and Stocksbridge, a mill in Brinsworth and at service centres in Wednesbury and Bolton, plus thousands more in the UK supply chain. The planned deal, in combination with Liberty's existing industrial foot print in the UK, would establish the group as one of Britain's most significant steel and engineering employers.

Liberty House is an international steel and non-ferrous metals group and has already taken on plants in Newport and Scotland. It also acquired parts of Caparo's advanced engineering products and precision strip businesses in the West Midlands.

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Liberty's GREENSTEEL vision promotes widespread melting and upcycling of UK domestic scrap metal, using arc furnaces powered from renewable energy sources.

Sanjeev Gupta, executive chairman of the Liberty House Group, told Reuters: "Rotherham capacity should reach over one million next year and Newport to two million over the next three and a half years. The balance will have to come from new capacity.

"There is a clear opportunity. There is not much recycling in the UK unlike other places in the world so there is a gap which has developed in the market."

Speciality Steels is not considered a downstream business linked to Port Talbot and strip products. It is Tata Steel Europe's only Electric Arc Furnace (EAF) based business and produces steel, predominantly stainless and low alloy grades, that is used in landing gear and aircraft engines including the landing gear of the Boeing 787 Dreamliner.

Rothbiz heard in July how the division was making use of its expertise and the serious investment in South Yorkshire in recent years to target the high value sectors over high volume. This year's target output is 209,000 tonnes, a long way short of Aldwarke's previous 800,000 capacity.

Investment in 2005 saw the Rotherham site at Aldwarke become the focus for steel making, casting and rolling of specialist steels. The steel is manufactured before undergoing further refining at the Stocksbridge plant or the Thrybergh Bar Mill to improve the quality. And it all comes from scrap metal - around 1.5 million tonnes a year.

Gupta explained the GREENSTEEL vision earlier this year. It involves investing in electric arc furnaces alongside blast furnaces to tackle the mountain of scrap steel the UK produces every year (up to 20 million tonnes in the next two decades). It also involves investing in low cost long term renewable power, as close to the steel plants as possible.

The third element is to invest in engineering companies that use this steel and turn it into advanced components for existing and new UK based growth industries.

Gupta added: "We have begun an ambitious process, designed to trigger the revival of UK manufacturing: re-growing UK steel and downstream engineering products, re-invigorating the supply chain, championing the development of new sustainable sources of power, generating tens of thousands of new skilled jobs, and stimulating new sectors in the economy."

Liberty House Group website

Images: Tom Austen / Liberty House


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