Wednesday, March 10, 2021

News: Steel firm meets with unions following fears over future funding


Liberty Steel has met with unions this week following reports in the national media that lender Greensill Capital filing for administration could have serious knock on effects for the steelmaker and its significant operations in Rotherham.

The firm has made substantial investments in the Rotherham steel operations it acquired for £100m from Tata Steel in 2917. In 2018, HRH Prince Charles switched on the second Electric Arc Furnace, the "N Furnace" at Aldwarke, and various upgrades to the plant has enabled the business to more than double production at Rotherham to over 500,000 tonnes per annum.

Redundancies were announced at the start of 2020 but the production of its new rebar products started in Rotherham recently. Only last December Liberty committed £60m to boost production to over one million tonnes per annum.

Reports have linked Liberty's owning group, GFG Alliance, to Greensill, a specialist in invoice financing that operates with less regulation than the traditional banks.

Chris Laverty, Trevor O’Sullivan and Will Stagg of Grant Thornton UK LLP were appointed as joint administrators of Greensill Capital (UK) Limited and Greensill Capital Management Company (UK) Limited on March 8.

Steel unions – Community, Unite and GMB – met with Sanjeev Gupta, the executive chairman of GFG Alliance, to seek assurances on behalf of members, and to request full transparency on the challenges facing Liberty Steel.

The unions said that the meeting was "positive and constructive," and that the group intends to secure a refinancing of the debt to provide the business with the necessary liquidity going forward.

A joint statement from the unions said: "The unions have told Mr Gupta our priority is to secure the future of all Liberty Steel’s UK assets, and to this end all options should be considered. Liberty Steel is a strategic business for the UK, producing high-quality steels for sectors of the economy including defence, energy, aerospace and engineering. Liberty Steel is also a low-carbon steelmaker, and the assets must be central to any strategy to decarbonise our steel industry.

"Last week the Business Secretary, Kwasi Kwarteng, convened a meeting of the Steel Council to bring new focus on supporting our sector to decarbonise. We have been encouraged by government’s commitment to taking on this challenge, and the growing consensus that to build back better and greener we need a strong and sustainable steel industry. No other UK company can produce the specialist steels made by Liberty’s UK operations, and so a future must be found to prevent us having to rely on high-carbon imports from countries that don’t play by the same rules.

"Given the strategic importance of Liberty’s steel operations, and their fundamental importance to delivering the UK’s climate objectives, we believe government must take an active role to facilitate a comprehensive solution that safeguards the future and protect jobs."

It added: "We recognise Mr Gupta’s desire to see Liberty Steel succeed, and recognise also his personal contribution in giving distressed UK steel assets a new lease of life."

The BBC caught sight of Sanjeev Gupta’s letter to staff this week which said GFG had adequate funding for its current needs but parts of the UK business face challenges.

Higher energy costs and a business rates system that restricts investment have been joined by a downturn in the global aviation industry caused by the Coronavirus pandemic. Speciality steel made in South Yorkshire supplies many of the leading aerospace manufacturers.

Sarah Champion MP, Member of Parliament for Rotherham, said: "Liberty has pointed to weakness in the aerospace sector as a factor in the performance of its UK operations. I raised this issue in Parliament on Monday and have been calling for broader Government support for the aerospace sector throughout the pandemic. It is particularly disappointing to see issues about which the Government has been repeatedly warned being cited as contributing to the uncertainty facing Rotherham’s steel workers.

"Since becoming an MP eight years ago I have been urging the Government to address the underlying barriers that have affected Britain’s steel industry. The Government must commit to resolve issues with business rates, high energy costs and government procurement to enable British steel not only to survive but to thrive.

"I continue to do all that I can to protect jobs in Rotherham. Steel is a vital strategic industry, a major local employer, and a fundamental part of our town's identity. The Government must actively engage with these issues and work to secure a strong, profitable future for steel in Rotherham."

Liberty Steel website

Images: Liberty Steel


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