Boris Johnson described British steel as a “great national asset” and said buying from Brits should be a priority for government plans, as he told Parliament he hoped the struggling manufacturing group Liberty Steel could be saved.
Liberty Steel owner Sanjeev Gupta pledged Thursday not to shut down any of its steel plants, even though creditors seek to liquidate key companies.
Gupta urgently sought refinancing for GFG Alliance, the conglomerate that owns Liberty Steel, after the collapse three weeks ago of Greensill Capital, a key creditor.
The Greensill collapse has raised fears about the future of GFG Alliance and the jobs of its 35,000 employees around the world, with metallurgical interests spanning Australia to Scotland. In the UK, GFG employs 5,000 people, including around 3000 metallurgists.
Liberty laid off thousands of workers in different places to save money. Some workers at its South Yorkshire special pressure steel plants in Rotherham and Stocksbridge are expected to restart production on Tuesday, earlier than expected.
The Prime Minister said on Thursday he was “very optimistic that we will find a solution” to the crisis, and also gave a strong indication that the government would seek to buy more British steel for public infrastructure projects. The Labor Party called for a similar policy last week.
“I think British steel is a great national asset and the fact that we still make steel in this country is of long term strategic importance,” the Prime Minister said on a visit to Middlesbrough .
“It would be crazy if we were not to take advantage of this post-Brexit moment to use the flexibility we have to buy British steel. So that’s what we want to do. “
GFG spoke Thursday with administrator of Greensill, Grant Thornton, and Credit Suisse, a bank that has purchased numerous GFG loans from Greensill. Gupta aims to negotiate a standstill deal with the administrator to delay repayment of Greensill’s loans, but the bank is pushing to get his money back.
Gupta argued that GFG and Liberty Steel had no debt to pay immediately because he had agreed to three-year terms with Greensill.
He struck a provocative tone on Thursday in an interview with BBC Radio 4’s Today program, his first since the collapse of Greensill.
“None of my steel plants under my supervision will be permanently closed,” he said.
GFG cannot afford to repay Greensill’s “multibillion” pound loans, according to Gupta. Its efforts to find new private sector lenders have so far been unsuccessful.
The British government also rejected Gupta’s plea for a £ 170million loan, citing concerns about the opacity of the company’s structure as well as fears that taxpayers’ money could be used to support GFG businesses outside of Britain.
The government has prepared options to intervene if the company falls into administration, including temporary state control through official receivership. This model was used for British Steel, which collapsed in 2019 before being bought by the Chinese Jingye.