Troubled Liberty Steel will cut production and close some of its smaller plants, putting more than 400 jobs at risk in a restructuring deal, sources said.
Liberty, part of the Gupta Family Group Alliance led by businessman Sanjeev Gupta, said it planned to shut down two UK factories and reduce production at others due to high electricity prices.
Steel mills in Newport, Wales and West Bromwich in the West Midlands will be closed, while production in Rotherham in South Yorkshire will be reduced, the company said.
“The production of some raw materials at Rotherham and subsequent plants is no longer viable in the short term due to high energy and import costs,” the statement said.
Liberty hopes to resume production as soon as market and operating conditions permit. The goal is to retain, redeploy and retrain up to 440 employees whose jobs are at risk.
The company said the measures create a “viable path forward” and will help keep 1,900 more workers out of 3,000 employed in the UK.
The shutdown is another blow to the British steel industry, which is struggling with high energy costs due to the Russian invasion of Ukraine, cheap imports and weak steel markets.
British Steel, owned by China’s Jingye, and Tata Steel UK are in talks with ministers about possible government support for electricity bills and help make the industry greener.
Liberty has been struggling to get cash injections since the collapse of GFG’s main lender, Greensill Capital, in March 2021.
Mr Gupta’s firms are facing a range of challenges, from the dismissal of several of the company’s key accountants in September to investigations into “alleged fraud, fraudulent transactions and money laundering” by the UK’s Serious Fraud Office and French police.
The local steelworkers’ union, Alan Davis, called the move a “major blow” to workers.
“After the collapse of Greensill Capital, the unions supported the company because we believed that the implementation of business plans, tested and supported by independent union experts, was the best way to secure jobs and the future of all companies.
“The plans we reviewed were based on significant investment and production ramp-ups, including at Liberty Steel Newport, and did not include any closed yards.”
“The government must do its part, hesitate and take action to achieve competitive energy prices, which our industry so desperately needs. Metallurgists are tired of warm words, it’s time for the government to decide whether they need a steel industry in this country.
Stephen Kinnock, Labor MP for Aberavon and leader of the All Party Parliamentary Group on Steel, said: “We all need to recognize the importance of the steel industry and its workers.
“In the coming decades, the world will use more steel than today, and in times of Putin’s invasion and Chinese aggression, we are in dire need of steel production capacity here in the UK.
“We simply cannot afford to move good jobs, our national security and our carbon emissions to dirtier steel mills abroad, which are often controlled by authoritarian regimes bent on hurting Britain.
“We need a Green Steel deal between government and industry – with action on uncompetitive UK electricity prices – and we need it now. This message is a clear example of what the UK government is worth, sitting idly by and doing nothing.”
The Department for Business, Energy and Industrial Strategy said steel plays a “critical role in every aspect of the UK economy” and they are working with steelmakers “to ensure a sustainable and competitive future”.
Source: I News
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