International Business Section Editor
In an effort to evade job loss of employees at its Rotherham plant in the UK, Liberty Steel, a global steel manufacturing and mining company, has received an injection of nearly $70 million (£50 million) in shareholder funds into the company. This comes after the company’s major financial service lender, Greensill Capital, filed for insolvency protection earlier this year. These funds will be issued through a separate corporate entity called Liberty Captial.
Liberty Steel’s owner, GFG Alliance, has been struggling to finance its UK operations since February and has been battling unpaid debts. However, it was planning to reopen its Rotherham plant this month after being closed since last spring, which would hopefully help to bring the company back on track. In fact, it plans to accelerate production to meet a 50,000-ton target each month. GFG Alliance’s Chief Transformation Officer, Jeffrey Kabel, said that the injection of funds is important for the “restructuring and transformation” of the company. This is especially important because earlier, the government had rejected GFG Alliance’s owner, businessman Sanjeev Gupta, from receiving emergency funds. The company’s Steelworker’s Union called Community, remarked that this addition of money should have happened earlier, but is still a “step in the right direction”.
After Greensill Capital collapsed, the majority of workers were temporarily laid-off due to GFG Alliance’s inability to secure sufficient funding for workers’ salaries, among other expenses. Liberty Steel’s Rotherham plant currently has approximately 660 workers, a large portion of the total 3000 steelworkers employed by Liberty Steel in the UK at the beginning of 2021. The 660 remaining workers will now be able to keep their jobs as a result of these new funds. GFG requested help from the government, however, they were denied by Business Secretary Kwasi Kwarteng. This was met by criticism by members of the larger UK steel sector. A spokesperson from industry body UK Steel commented, “The last thing the sector needs now is for government to merely sit on its hands and risk an energy crisis becoming a steel industry crisis.” According to sources from within the industry, the government has not been doing its part to prevent a steel crisis while the situation is still somewhat manageable. This could ultimately have a large-scale impact, not only on the UK’s economy but also on the global economy. The stability of the Liberty Steel company will be observed in the months ahead.