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Liberty Steel has produced nothing at two of its key UK plants since July, in a sign of the deep financial difficulties for Britain’s third-biggest steelmaker as it looks for rescue funding.
The plants at Rotherham in South Yorkshire and Motherwell in Scotland have not produced any steel for about nine months because of a lack of funds to buy vital materials, with staff on furlough on 85% of their salaries for the duration, according to workers who spoke to the Guardian.
Steel companies have been struggling for several years. UK steel production fell in 2024 to its lowest since the 1930s, and in the last month the government in effect took over the British Steel blast furnaces at Scunthorpe, amid fears of more than 2,700 job losses and the end of primary steel-making in the UK.
Liberty Steel is ultimately owned by Sanjeev Gupta, whose GFG Alliance metals empire is under severe financial pressure across the world after a debt-fuelled expansion spree. Gupta has been battling for control of metals companies in the UK and Australia against creditors led by the administrators for Greensill Capital, a lender that collapsed in 2021. Greensill had lent Gupta’s companies about $5bn (£3.7bn).
The financial turmoil has left Liberty Steel’s UK plants unable to access cash needed to run their operations, with one creditor seeking to recover money via a winding up petition at London’s high court on Wednesday.
The Liberty subsidiary that runs the site at Rotherham, called Speciality Steel UK (SSUK), was granted until 16 July to hold talks with unnamed potential investors, in a desperate effort to avoid a liquidation that would put 1,450 jobs at risk.
The Labour government would face pressure to step in if the Rotherham plant, seen as an important part of British steel-making capabilities, faced bankruptcy.
SSUK supplies aerospace and defence companies including Rolls-Royce and Airbus, and operates an electric arc furnace at Rotherham, a related works nearby at Stocksbridge, and two other sites. That business owes creditors £619m, including £289m to related GFG companies and £289m to Greensill’s administrators. Greensill’s administrators, Grant Thornton, earlier this month opposed a restructuring plan that would have cut the amount owed to it significantly, leaving Liberty scrambling to find other emergency funding.
Daniel Judd, a barrister representing the company, told the court that SSUK was “urgently considering its options” after the failure of the restructuring plan, including talks to try to secure an unnamed “third-party investor”.
“Urgent meetings have been taking place to advance this,” he told the court.
The group confirmed it was considering a sale of its SSUKbusiness in South Yorkshire, saying that “change is essential”.
Jeffrey Kabel, Liberty’s chief transformation officer, said: “Today’s adjournment is a positive development, allowing us the necessary time to finalise options, including a sale of the business while we continue to pursue our debt restructuring efforts.
“We remain committed to finding the right solution that preserves electric arc furnace steel-making in the UK, a vital national asset serving strategic supply chains.”
Kabel said Greensill’s collapse was “restricting its access to capital”, alongside “longstanding competitiveness challenges dating back decades” for British steelmakers.
Alun Davies, national secretary for steel at Community, a union representing workers, said the extra time “essentially amounts to the company kicking the can down the road” and “will achieve very little” other than uncertainty and distress for the workforce.
“Things cannot go on as they are,” he said. “Sanjeev Gupta must demonstrate now that he is willing to invest in the business in a meaningful way, or he should step aside and make way for a new, responsible owner.”
The UK’s Serious Fraud Office has been investigating GFG Alliance and Greensill over “suspected fraud, fraudulent trading and money laundering” since 2021. Government figures have long been wary of offering financial support to Gupta’s companies in light of the investigation and concerns over whether money would be used to prop up businesses in other countries.
Before July, Rotherham was running month-on, month-off for as long as five years, relying mainly on customers that could make pre-payments to buy materials needed. Rotherham runs the UK’s largest electric arc furnace, melting scrap steel to make specialised automotive and aerospace parts.
The Scottish site is run by another subsidiary, Liberty Steel Dalzell. Workers at the plant are concerned that the failure to restart production could result in the Royal Navy considering other options for steel for new warships. The fleet solid support ships are due to be made with steel from British Steel in Scunthorpe, which would be rolled into plate at Dalzell, and then fabricated at Harland & Wolff in Belfast.
It is understood that the company is confident the Dalzell plant will be able to restart work soon.
