Nicola Sturgeon‘s £568million taxpayer-funded deal struck with steel tycoon Sanjeev Gupta is back in the spotlight. The SNP-led Scottish Government entered into an agreement with Mr Gupta’s GFG Alliance in 2016.
Two steel mills were bought from Tata Steel by the Scottish Government for £1 before being transferred to Mr Gupta, backed with a £7m taxpayer funded loan. But the Scottish Daily Express reports workers at Dalzell and Clydebridge in Lanarkshire were furloughed on 80% pay and the last working mill in Scotland left standing idle.
The SNP also helped Mr Gupta take over Lochaber’s aluminium smelter near Fort William in the same year with £600m in loan guarantees.
Mr Gupta’s Speciality Steels UK (SSUK) firm faces a winding-up petition. It doesn’t include the entrepreneur’s businesses in Scotland.
SSUK, which is part of the Liberty Steel Group founded by Mr Gupta, employs 1,450 people. The High Court heard that the steel company in South Yorkshire has avoided insolvency because a potential buyer has been found.
A specialist judge on Wednesday (May 21) adjourned the winding up petition for eight weeks to allow time for the sale of the company to go through.
Lawyers representing SSUK said at a hearing that “urgent meetings have been taking place” with a “third party purchaser”.
The Scottish Daily Express reports that these developments have raised concerns about impacts on Mr Gupta’s operations in Scotland, which Liberty Steel Group have rejected.
A Liberty Steel Group spokesman said: “The proceedings with regards to Speciality Steel UK have no relation to and effect on the Scottish businesses.”
Nevertheless, the Scottish Lib Dems urged Edinburgh and London to work together to secure a future for the sites.
Its economy spokesman, Jamie Greene, said: “Workers at the Dalzell plant will be very worried about what this news could mean for them.
“My party has repeatedly warned about the possibility that Liberty Steel operations could collapse. We wrote to the Deputy First Minister when it became clear that all was not well at Dalzell, but so far ministers have refused to act.
“Today’s news must be the catalyst for both the UK and Scottish governments to come together and agree a joined-up strategy for this vital Scottish business. The Scottish Government has intervened before, albeit it hasn’t gone well, so there is significant public interest in what it does next.
“The Dalzell plant has huge potential, including in the wind industry. Ministers must act urgently for the sake of all those workers potentially at risk.”
A Department for Business and Trade spokesperson said: “We continue to closely monitor developments around Liberty Steel, including any public hearings, which are of course a matter for the company.
“It is ultimately for Liberty to manage commercial decisions on the future of its companies, and we hope it succeeds with its plans to continue on a sustainable basis.”
Jeffrey Kabel, Liberty Steel’s Chief Transformation Officer, said today’s adjournment is a positive development which allows the company the necessary time to finalise options, including a sale of the business while the firm continues to pursue debt restructuring efforts.
He added: “We remain committed to finding the right solution that preserves EAF steelmaking in the UK, a vital national asset serving strategic supply chains.
“SSUK has been involved in complex debt restructuring since the collapse of Greensill Capital in 2021 restricting its access to capital. However, like all steel producers in the UK, SSUK has faced long-standing competitiveness challenges dating back decades.
“Throughout Liberty’s ownership of SSUK its shareholder has consistently supported the business, investing nearly £200m in loss funding and salaries over the past four years, even as significant portions of the business remained inactive.
“We recognise change is essential to set the business on a positive trajectory and provide certainty for our creditors, employees, and stakeholders.
“We will utilise the time afforded by the adjournment to engage in intensive discussions with a view to achieving an outcome which best serves the strategic interests of the UK, the South Yorkshire community, and the broader UK steel sector.”