GFG: Some UK units to operate 'intermittently' amid finance squeeze
Posted on 11 March 2021
GFG Alliance, the owner of Liberty Steel Group, said late March 10 that some of its UK businesses will be operating intermittently.
The company's statement follows market indications that production at some Liberty works may have been reduced due to a cash squeeze following the entry into administration March 8 of GFG Alliance financier Greensill Capital (UK) Ltd. This is understood to have hit raw material supplies to some steel works.
"Some UK businesses will be operating intermittently, which can and will be achieved without compromising the condition of the plants," a GFG Alliance spokesman said in an emailed statement. "We are working closely with the trades unions and will be making use of the government furlough scheme for employees where possible in those circumstances." The statement is understood to refer to GFG's steel operations only. The group also produces aluminum in the UK.
A spokesman for the UK's GMB union said that following "positive and constructive" talks March 9 between a group of UK steel trade unions and GFG Alliance executive chairman Sanjeev Gupta further talks between Liberty and the unions occurred March 10 and will continue March 11, when a new union statement will be made.
The GMB spokesman told S&P Global Platts that the unions are continuing to support Liberty in an effort to overcome the crisis.
Liberty Steel UK is the third largest steelmaker in the country, with nine sites across England, Scotland and Wales, producing both flat and long products. It employs nearly 3,000 people and has an annual steel rolling capacity approaching 3 million mt/year.
Market sources told Platts that Liberty's Speciality Steels operation stopped production March 8 and that its employees have been put on furlough till the end of March.
The operation failed to buy any ferrous scrap, the principal raw material for its electric arc furnace, the sources said. The company is understood typically to buy 40,000 mt-45,000 mt of scrap per month.
Larger companies are reported in the market to have struggled to acquire suitable insurance and so have stepped back from supplying Liberty Speciality Steels UK, which has sites at Stocksbridge and Rotherham. In addition, there is talk that the Speciality Steels operation had switched some production to making lower quality steel, including Liberty's "green rebar" at Rotherham due to a recent fall in demand for aerospace grade steels.
GFG Alliance did not comment on the market talk.
According to Liberty's website, the UK business has plans to create a "GREENSTEEL" hub at its Newport site in Wales using renewable energy from sister company SIMEC Atlantis' Uskmouth biomass plant to power a new electric arc furnace.
Earlier this week GFG Alliance had said the UK Speciality Steels business had seen demand for some products fall by 60% following the downturn in the aerospace sector due to COVID-19.
Regarding GFG Alliance's European steel operations outside the UK, a Liberty Steel Group spokesperson said: "We can confirm there has been no significant impact on our supply chain across continental Europe. We continue to engage with suppliers on a regular basis to ensure we are able to continue to supply our customers with the products they require."Source : Platts