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Union leader condemns industrial failures as Liberty Steel teeters on brink

© PASanjeev Gupta, the head of the Liberty Group.
Sanjeev Gupta, the head of the Liberty Group.

The leader of one of the country’s biggest trade unions has accused ministers of lacking an industrial strategy as another major manufacturer backed by taxpayers’ cash faces a financial crisis.

The future of metals tycoon Sanjeev Gupta’s empire, GFG Alliance, which includes Scottish steel plants and the country’s last aluminium smelter, is under threat following the collapse of its main lender Greensill.

It comes just three months after the collapse of BiFab and Scotland’s failure to win work on multi-billion pound offshore wind projects. The Scottish government yesterday said it was “working closely” with the UK government, unions and the steel industry to seek the “best possible outcomes”.

The Financial Times yesterday revealed the UK government has drafted emergency contingency plans to run GFG Alliance, which owns Liberty steel, while looking for a buyer as the country’s third biggest steel company teeters on the brink. Using public money to maintain production could cost taxpayers almost £600 million.

GMB Scottish Secretary Gary Smith said the situation was deeply concerning, adding: “All we seem to do is lurch from crisis to crisis to closure. There needs to be a tangible industrial strategy. We need to learn the lessons of BiFab and we also need to learn the lessons of Covid, where we realised how exposed our economy is to our over-reliance on imports.

“Every city in the Central Belt has industrial museum pieces. Our shipyards are a shadow of their former selves because of a lack of planning and investment. We had major problems at Ferguson’s shipyard because the yard was allowed to be run into the ground for decades. The BiFab yards are lying empty, we lost jobs at bus builder Alexander Dennis and there is a major drop-off in oil and gas work.”

The Scottish government struck a deal in 2016 with Gupta, which enabled GFG Alliance to take over a Highlands aluminium smelter and hydro-electric plant. The Scottish government, through Scottish Enterprise, also loaned Gupta £7m to acquire two steel mills in Lanarkshire. The loan has never been paid back.

Gupta’s £330m purchase of the Fort William aluminium smelter and hydro was aided by a 25-year government guarantee – worth up to £575m – for the price of the hydro electricity that powered the site. By contrast, Fife engineering firm BiFab crashed into administration after the Scottish government withdrew backing last December. Ministers rescued the Fife company four years ago with £52.4m of public money, but last year withdrew a £30m guarantee needed to secure a contract to manufacture eight offshore wind turbine jackets.

Last month Infrastrata, owner of shipbuilding company Harland & Wolff, bought its Arnish and Methil sites for £850,000.

Smith added: “The sums of money being talked about are eye-watering. The BiFab workers will be looking at this with an enormous sense of anger and frustration.”

UK Business Secretary Kwasi Kwarteng has indicated that the government could intervene to save GFG.

The Scottish government said: “We are monitoring the situation at the GFG Alliance and working with the UK government, unions and the steel industry.”