Boris Johnson described UK steel as a “great national asset” and said buying British must be a priority for government projects, as he told parliament he was hopeful that the distressed manufacturing group Liberty Steel could be saved.
The Liberty Steel owner, Sanjeev Gupta on Thursday pledged not to shut down any of his steel plants even as creditors seek to wind up key businesses.
Gupta has been urgently seeking refinancing for GFG Alliance, the conglomerate that owns Liberty Steel, after the collapse three weeks ago of Greensill Capital, a key creditor.
The Greensill collapse has prompted fears over the future of GFG Alliance and the jobs of its 35,000 global employees, with metals interests stretching from Australia to Scotland. In the UK, GFG employs 5,000 people, including about 3,000 steelworkers.
Liberty has furloughed thousands of workers at different points to save cash. Some workers at its under-pressure South Yorkshire speciality steels plants in Rotherham and Stocksbridge are due to restart production on Tuesday, earlier than previously expected.
The prime minister on Thursday said he was “very hopeful that we will get a solution” to the crisis, and also gave a strong indication that the government would seek to buy more British steel for public infrastructure projects. Labour called for a similar policy last week.
“I think British steel is a great national asset and the fact that we still make steel in this country is of strategic long-term importance,” the prime minister said during a visit to Middlesbrough.
“It would be crazy if we were not to use this post-Brexit moment to use the flexibility we have to buy British steel. So that’s what we want to do.”
GFG held talks on Thursday with Greensill’s administrator, Grant Thornton, and Credit Suisse, a bank which bought many of the GFG loans from Greensill. Gupta is aiming to negotiate a standstill agreement with the administrator to delay repaying the Greensill loans, but the bank is pushing to recoup its money.
Gupta argued that GFG and Liberty Steel do not have any debts that are due immediately because he had agreed three-year terms with Greensill.
He struck a defiant tone on Thursday in an interview with BBC Radio 4’s Today programme, his first since the collapse of Greensill.
“None of my steel plants under my watch will be shut down for sure,” he said.
GFG does not have the money to repay the Greensill loans which run to “many billions” of pounds, according to Gupta. His efforts to find new private-sector lenders have so far been unsuccessful.
The UK government has also rejected Gupta’s plea for a £170m loan, citing concerns over the opacity of the company’s structure as well as concerns that taxpayer money could be used to prop up GFG companies outside Britain.
The government has prepared options to step in if the company falls into administration, including temporary state control via an official receiver. That model was used for British Steel, which collapsed in 2019 before being bought by China’s Jingye.
However, some union officials hope to persuade the government to step in before administration is required.
Alasdair McDiarmid, the operations director at Community, a steelworkers’ union, said Gupta must find a way to assure the government that any support would be ringfenced to save UK jobs.
“These are challenging times and Mr Gupta’s plans to refinance the business may not succeed, and government must be ready to intervene to safeguard the jobs and the assets,” McDiarmid said. “The stakes are high and these strategically important businesses absolutely must have a future.”
Greensill Capital was founded by Lex Greensill, an Australian banker who enjoyed access to government when David Cameron was prime minister. Cameron was later employed by Greensill and lobbied on its behalf via text messages to the chancellor, Rishi Sunak, to try to secure access to government Covid-19 loan schemes.
Gupta said he had not had any interaction with Cameron as an employee of Greensill.
Grant Thornton and Credit Suisse declined to comment.
