Gupta steel works on 'profitable footing', Scottish minister says

Fergus Ewing has told MSPs steel magnate Sanjeev Gupta had reassured him his Scottish companies were financially sound despite the collapse of his financiers.

Fergus Ewing said he had been in communication with GFG about the future of Liberty Steel.
Fergus Ewing said he had been in communication with GFG about the future of Liberty Steel.

The Cabinet secretary for the rural economy said while there were “commercial sensitives” around the the financial affairs of Mr Gupta’s GFG Alliance, he had spoken with the billionaire about Greensill Capital entering administration, and had been told the Scottish steel and aluminium businesses were “presently on a profitable footing”.

The failure of Greensill, a financial services company, has left many fearing that thousands of jobs at Liberty Steel’s assets in the UK could be at risk, including those who work at the Lochaber aluminium smelting plant, to which the Scottish Government has provided more than £500 million of guarantees.

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My Gupta’s company, GFG Alliance, also operates the Dalzell and Clydebridge steel works, the hydro-electric power station at Fort William, Jahama Highland Estates and Shand Cycles. It is understood the parent firm owes Greensill more than £3 billion.

Making a statement in Holyrood on Wednesday, Mr Ewing revealed he had spoken with the steel tycoon on Thursday last week and he had been “open about challenges posed by the collapse of Greensill, but also emphasised the underlying operational health of GFG’s Scottish operations”.

Mr Ewing said: “He indicated that market demand is strong and metals prices are currently among the best seen in over a decade. Hence, GFG’s Scottish steel and aluminium businesses are presently on a profitable footing, according to Mr Gupta.

“Mr Gupta told me the group has adequate funding for its current needs while they progress refinancing. He nevertheless confirmed that stabilising the finances of the GFG Alliance in the near term is important to its future activities, including those in Scotland.”

However, Mr Ewing admitted “reliable information on the extent of Greensill’s operations remains unclear”, but that a ministerial taskforce was “monitoring the situation closely”.

Mr Ewing said Liberty Steel Dalzell Limited was the recipient of a Scottish Investment Bank loan of £7m, but it would have invested £18m by the end of this financial year.

“Perhaps most importantly, Dalzell currently employs 140 workers including three apprentices, retaining vital industrial skills and supporting livelihoods,” he said.

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He also said the government support for the aluminium smelter in Lochaber, guaranteeing its power purchases, had “prevented the break-up of the assets” and its closure and saw the plant employ 200 people.

"The amounts guaranteed by the Scottish Government are published in the Scottish Government’s Consolidated Accounts and vary between £14m and £32m per annum over the 25-year life of the guarantee.” he said.

Scottish Conservative Murdo Fraser asked if the Scottish Government itself had taken any steps to find out if the businesses were “healthy” rather than "rely on Mr Gupta’s word that is the case”.

He said the government had a “poor track record” of investing public funds and asked if there had been an assessment the overall risk to the public purse should there be a collapse of Liberty steel.

Mr Ewing said he had met with trade unions who were “optimistic and confident” about the future of the plants, and claimed the smelter had been trading profitably and the government received regular information about its finances, adding the security value of the assets was “very significant”.

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