Ministers have been urged to take an “active role” in protecting thousands of jobs at Britain’s third largest steel firm after the collapse of a major finance provider.
Unions issued the plea after a meeting with Liberty Steel boss Sanjeev Gupta.
Mr Gupta’s GFG Alliance, which owns Liberty, admitted that the collapse of Greensill Capital into administration had created a “challenging situation” but said it had “adequate funding for our current needs”.
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May 2020: Gupta: ‘We need to invest in local steel’
Greensill, whose advisers include the former prime minister David Cameron, is a major provider of finance to Liberty Steel.
Liberty employs 3,000 people directly at 11 sites including Rotherham and Stocksbridge in south Yorkshire, Newport in South Wales and Hartlepool.
It also supports at least 2,000 more jobs in the supply chain.
Downing Street has described reports that thousands of jobs might be at risk as “very worrying”. The prime minister’s official spokesman said: “We continue to follow developments closely.”
Three unions – Community, Unite and GMB – have held a meeting with Mr Gupta to seek assurances on behalf of workers and seek “full transparency on the challenges facing Liberty Steel”.
In a statement they said: “The meeting was positive and constructive, and it is clear Mr Gupta intends to secure a refinancing of the debt to provide the business with the necessary liquidity going forward.
Greensill’s advisers include David Cameron. Pic: AP
“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.
“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.”
GFG said Mr Gupta had held a “productive meeting” with the unions “to discuss the plan to make the parts of the UK businesses facing weak market conditions more financially sustainable and address the disruption caused by the situation at Greensill”.
It said that Liberty had seen a 60% slump in demand for some products following the downturn in the aerospace sector created by the coronavirus pandemic.
Demand for some products has slumped as a result of the downturn in the aerospace sector
GFG said it was taking “prudent steps” to shore up its finances and using the furlough scheme to support employees affected by the weakness in aerospace.
“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,” the company said.
It said the wider GFG Alliance was “operationally strong”, bolstered by high steel prices as well as demand for aluminium and iron ore.
“While Greensill’s difficulties have created a challenging situation, we have adequate funding for our current needs,” GFG said.
“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.”