THE UK Government has rejected a request from Liberty Steel’s owner, GFG Alliance, for £170 million in financial support for the company.
It came after founder Sanjeev Gupta last week asked for help with operating expenses in the light of recent losses, and insolvency moves by Greensill Capital, its main financial backer.
GFG owns the UK’s last remaining aluminium smelter at Lochaber, the Dalzell steelworks, Clydebridge steel plant and the hydroelectric power station at Fort William, as well as Shand Cycles in Livingston and Jahama Highland Estates in Fort William.
Across the UK it has a dozen sites and employs more than 5000 people, among its worldwide total of 35,000 workers.
Unions have said public ownership should be considered as a solution to the group’s woes, but SNP Westminster leader Ian Blackford, whose constituency includes the Lochaber smelter, suggested its Scottish operations could be run separately from the group, and warned: “Public ownership should only be regarded as a last resort.”
READ MORE: UK Government rejects Liberty Steel's plea for £170m in financial support
The group remained upbeat though, and in a statement yesterday said its global businesses were performing well and generating a “positive” cash flow.
“Our primary steel and mining operations in Europe and Australia are booking record profits and we have adequate funding for our current needs,” said GFG.
“We are taking prudent steps across our global portfolio to manage resources while we try to negotiate a formal standstill agreement with Greensill’s administrators and refinance the businesses.”
The firm said it planned to restart steel manufacturing in the UK early next month.
A spokesperson added: “Liberty Steel UK is undertaking significant self-help measures to reduce steel stocks, matching stock to customer orders, and
working with customers to achieve terms that will bring in cash earlier ... The business is also working on solutions to provide additional working capital facilities to replace the funding gap left by Greensill.”
Unite Scottish secretary, Pat Rafferty, said the Scottish Government should step in. “It’s critical that the Scottish Government is actively engaged in negotiations with UK Government Ministers to ensure that contingency plans are brought forward to safeguard the production of steel.
“No option should be ruled out in protecting the long-term future of Liberty Steel and that must include the option of public ownership. If that is not done at a UK-wide level then the Scottish Government must have it as an option for Dalzell.”
The GMB said it was pushing for a meeting with the UK Business Secretary to consider a “plan B”, which should include “all options”.
Ross Murdoch, their national officer, said: “GMB will now seek an urgent meeting with Kwasi Kwarteng, Secretary of State for BEIS to discuss ‘plan B’.
“This must include all options, including taking the UK business into public ownership.”
The Community union said it hoped Gupta would be able to secure alternative funding, but its general secretary Roy Rickhuss added: “If he is not able to do this then government must step in to protect the jobs and assets.”
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