Liberty Steel's parent company 'strong' despite collapse of lender

Discussions to secure new financing following the collapse of Greensill are ‘progressing well,’ according to a spokesman for GFG Alliance.

It comes after fears were raised for 5,000 jobs when Liberty Steel's lender filed for administration.

Liberty owns 12 steel plants in the UK including in Rotherham, Stocksbridge, Newport and Hartlepool.

The GFG spokesman said boss Sanjeev Gupta had a productive meeting with the unions to discuss plans to make those parts of the UK business facing weak market conditions more financially sustainable.

He added: “Liberty Steel Group has provided significant support to the UK speciality steel business which has seen the demand for some products fall by 60 per cent following the downturn in the aerospace sector due to Covid-19.

“As part of the prudent steps we are taking to manage cash, we are discussing new opportunities with customers and suppliers to improve cash flow and looking to secure additional working capital facilities to support the business.

“We also continue to use the furlough scheme to support employees affected by the weakness in the aerospace market.

“We will continue to work closely with the unions and our employees to identify the most effective ways of supporting the business and preserving jobs.

“GFG Alliance as a whole is operationally strong and we are benefiting from a 13-year high in steel prices as well as strong markets in aluminium and iron ore.

“While Greensill’s difficulties have created a challenging situation, we have adequate funding for our current needs. Through our global efficiency drive we’ve improved our operations’ margins with most of our major businesses generating positive cashflows.

"Discussions to secure alternative long-term funding are progressing well but will take some time to organise. While this takes place we have asked all of our businesses to manage cash carefully.”

Following the meeting, the National Trade Union Steel Coordinating Committee said it was time for the government to step in.

The committee represents the steel unions – Community, Unite and GMB.

A spokesman said they had a positive meeting with Mr Gupta and the recognised his personal contribution to supporting ‘distressed UK steel assets’.

He added: “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.”

A Government spokesperson said: “The Government has put together a far-reaching package of support to help businesses and workers through the coronavirus pandemic. We continue to regularly engage with businesses across all sectors, including those in the steel industry.”

Rotherham MP Sarah Champion called for more support for the aerospace sector. Aero enginemaker Rolls-Royce in Waverley, which is also in her constituency, is planning 75 redundancies.

She added: “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.”

Mr Gupta's business empire employs around 5,000 people in the UK, a majority of whom work for Liberty Steel.

Often labelled the "saviour of steel", the businessman has snapped up a series of production sites across the UK which had been under pressure from cheap overseas competition.

However GFG has itself faced pressure, and has relied on Greensill for around £3.6 billion of funding used to pay its suppliers.

Last year, Liberty Steel said it would spend £60m doubling production at its Rotherham plant after receiving orders for nearly 10,000 tonnes of reinforcing bar.

Upgrades to its electric arc furnace and small bloom caster would help it hit output of 1m tonnes-a-year, bosses said, boosting supply of ‘rebar’ for schools, hospitals, houses, energy facilities and transport links.

The programme also includes upgrades to Thrybergh Bar Mill and and the installation of a new Rod Block to produce wire rod.

The business said it would deliver almost 10,000 tonnes of ‘GreBar’, made from scrap metal melted in an electric furnace, before the end of the year.

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Thank you. Nancy Fielder, editor.