Liege restructuring ‘made much more complex’ on energy costs, geopolitics: Liberty Steel

Restructuring Liberty Steel Group’s Liege unit in Belgium has recently become “much more complex” due to escalating energy and carbon prices and geopolitics, according to a Liberty Steel spokesperson.

Liberty Steel’s Flemalle steel galvanizing lines in Belgium — part of the Liege unit — have remained at a standstill since December 2021 due to lack of feedstock and the ongoing restructuring process, market sources and sources close to the company told S&P Global Commodity Insights April 1 and 4.

A court decision on a business plan presented to ensure the plant’s future is expected April 13, a Liberty Steel Group spokesperson said.

One market source indicated that doubts have grown over an eventual restart at the galvanizing installations. This follows a meeting between the company and the Liège Enterprise Court last week.

“At a meeting with the Liège Enterprise Court on 30 March, the management of LIBERTY Liège gave a detailed presentation on the company’s significant restructuring process and explained that it had been made much more complex due to the huge rise in energy and carbon prices over the last few months, supply shortages due recent geopolitical developments as well as excessive competition from imports into Europe,” a Liberty Steel Group spokesperson said in a note emailed to S&P Global over the weekend.

“Despite that, LIBERTY Liege has made good progress on its new business plan, which will support the sustainable future of the business, and remains committed to delivering the investment required to secure that future.”

Details of the business plan were not given due to their “commercially sensitive” nature.

“LIBERTY Liège calls on its stakeholders to support the business plan submitted to the court as it will avoid potential disruption of production,” the spokesperson continued. “The company now awaits the Court’s decision on 13 April which we hope will support the new business plan, which offers the best chance for a sustainable outcome for the plants, their 650 employees and their loyal customer base.”

Tinning line operating

The Liberty Steel spokesperson confirmed that production restarted as planned and announced mid-February at the 200,000 mt/year tinning line at its Tilleur site in Belgium, also part of Liberty Liege. This restart followed three months of maintenance work on this line and intermittent disruption in raw material supplies amid the coronavirus pandemic.

GFG Alliance, which groups together Liberty Steel Group and other metals and energy assets owned by magnate Sanjeev Gupta, had provided more than Eur40 million ($47 million) in funding to Liberty Liège since its acquisition from ArcelorMittal as part of an anti-trust deal in July 2019, Liberty Steel Group said in February. However, the investment plans were initially undermined by a weak steel market in 2019, before the business was negatively impacted by the pandemic and supply chain disruptions, followed by the collapse of Greensill Capital, GFG Alliance’s main financier, in March 2021.

Flemalle has two galvanizing lines: G4 and G5. Liberty Steel Group had previously said it had a “commitment” to the Liège authorities to restart the G5 plant.

Liberty’s intended restructuring of Liberty Liège follows the earlier granting of court protection from creditors – under a so-called judicial reorganization procedure requested in April 2021 – for both its Liège and Dudelange operations.

As part of a broader group restructuring announced late June 2021, Liberty Group merged its Liege, Dudelange in Luxembourg and Magona steel works in Italy into its larger Galati integrated steel operation in Romania.

Dudelange and Liege together have annual production capacities estimated at 1.6 million mt of galvanized/coated steel, 300,000 mt of cold-rolled coil, and 200,000 mt of tinplate, products sought after in recent months due to a tightness in European markets.

Magona restarted its cold rolled coil and hot dip galvanized lines in August 2021, using hot rolled coil supplied by Galati. Market sources have indicated that the need for galvanized material from Liège’s G4 line may now be less given Magona’s ramp-up.

Local press speculated last September that one galvanizing line at Flemalle could be mothballed, amid redundancies.

Platts North European hot-dip galvanized coil domestic ex-works price rose to a high of Eur1,550/mt ($1,699/mt) March 23, before slipping back marginally last week. Price of the product, used in the automotive, white goods and construction sectors, has risen 40% year-to-date.

— Diana Kinch, Benjamin Steven