Liberty to restart steelmaking April 6, says customers ‘paying upfront’

Liberty Steel UK plans to restart steelmaking around April 6, a spokesperson for parent group GFG Alliance said March 29.

The restart is understood to refer to electric arc furnace steelmaking at Liberty Steel’s Speciality Steels site in Rotherham, northern UK, Liberty’s sole crude steel production site in the UK. On March 10, after the collapse of its financier Greensill Capital, GFG Alliance had announced that some of its UK sites were working “intermittently.”

Market sources told S&P Global Platts at that time that Liberty’s Speciality Steels unit had stopped production March 8 and furloughed its employees until the end of March. The operation failed to buy any ferrous scrap, the principal raw material for its EAF, the sources said. The company is understood typically to buy 40,000 mt-45,000 mt of scrap per month.

Liberty did not release full details of the restart nor the expected production level at the site. It is believed the restart will be at partial capacity, due to recent slack demand for aerospace products manufactured at the Rotherham and Stocksbridge Speciality Steel sites.

“Parts of LIBERTY Steel UK have been negatively impacted by COVID-19 with demand for some aerospace products down by 60%,” the GFG Alliance spokesperson said in a statement. “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.”

Finding customer support

Liberty Steel UK is undertaking significant self help measures to reduce steel stocks, matching stocks to customer orders, and working with customers to achieve terms that will bring in cash earlier, yielding tens of millions of pounds in savings, the spokesperson said.

“LIBERTY Steel UK has been supported by major customers placing significant orders and paying upfront,” the statement said.

UK steel union GMB, which earlier this month professed its support for magnate Sanjeev Gupta’s GFG Alliance, on March 29 put out a statement effectively calling for the UK government to consider nationalizing Liberty’s UK steel operations. This followed reports that the government had in recent days refused to grant Liberty a GBP 170 million ($235 million) loan to prop up its UK steelmaking activities.

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. Its UK rolled products capacity is around 3 million mt/year, with some 3,000 employees.

UK business ‘standalone’

The GFG Alliance spokesperson noted that Liberty’s UK businesses are standalone and that any issues in the UK do not affect other parts of the group’s global portfolio.

“Most of GFG Alliance’s businesses across its global portfolio are performing well and generating positive cash flow, supported by the operational improvements we’ve made and strong steel, aluminum and iron ore markets,” the spokesperson 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.”

— Diana Kinch