Liberty Steel UK says it is to restart production next week as its parent firm continues to seek new funding to fill the hole left by the collapse of Greensill Capital earlier this month.
Sky News reported on Friday how GFG Alliance, owned by Sanjeev Gupta, had gone cap in hand to the government for a bailout of up to £170m after its main source of cash went bust.
GFG said on Monday that it remained in “constructive discussions” with officials about potential assistance, despite apparent concern in government circles about GFG’s structure and where any rescue funds would be domiciled.
Liberty Steel UK is part of Sanjeev Gupta’s global empire GFG (file pic)
Liberty Steel is the country’s third-largest steel producer and employs 3,000 people at its electric arc furnace operation, which creates steel from recycled products.
GFG has a further 2,000 UK staff working in the aluminium and renewable energy sectors.
The company said: “Our primary steel and mining operations in Europe and Australia are booking record profits and we have adequate funding for our current needs.
“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.”
In a podcast for employees, Mr Gupta moved to reassure his global workforce of 35,000 that every effort was being made to find alternative sources of funding, saying March had proved “the most difficult month of my life”.
He also ruled out the sale of any divisions to ease the cash crunch.
GFG said of the steel pressures: “Parts of Liberty Steel UK have been negatively impacted by COVID-19 with demand for some aerospace products down by 60%.
Labour’s Ed Miliband has urged ministers not to rule out public ownership for Liberty should the funding crunch prove fatal
“This has been compounded by a poor operating environment in the UK for electro-intensive steel makers which suffer from energy costs that are up to two thirds higher than in mainland Europe.”
Liberty stopped production earlier this month over supply issues linked to Greensill’s demise but said it expected work to recommence on 6 April.
It said restart efforts had been supported by strong orders and customers paying up front.
The government has said it is continuing to talk to Liberty.
A spokesperson said: “The government has supported the steel sector extensively, including providing over £500m in recent years to help with the costs of energy.
“Our unprecedented package of Covid support is still available to the sector to protect jobs and ensure that producers have the right support during this challenging time.”
Shadow business secretary Ed Miliband responded: “The government must have a plan B for Liberty Steel to protect thousands of jobs and our steelmaking capacity, which is vital for our communities and our national security.
“All options should be on the table, including public ownership.”