Yahoo Finance Aerospace body urges government to secure Liberty Steel supply
The aerospace industry is calling for the government to intervene to secure the supply of specialist steel products it relies on, amid struggles for funding for Liberty Steel.
Liberty Steel’s owner, Sanjeev Gupta, is urgently seeking finance after the collapse of Greensill Capital, previously its key lender. Liberty Steel is the UK’s third-largest steelmaker employing has about 3,500 workers, while Gupta’s broader GFG metals empire employs about 35,000 people worldwide.
ADS Group, which represents aerospace and defence companies including Airbus and Rolls-Royce, said its members were particularly concerned with maintaining supply from two Liberty Steel sites in Rotherham and Stocksbridge.
The two plants, both in South Yorkshire, produce high-strength steel that it resistant to corrosion, making it a key material for jet engines, landing gear and other parts such as the propellers on smaller aircraft.
Kevin Craven, ADS’s interim chief executive, has written to Kwasi Kwarteng, the business secretary, asking for his “urgent intervention to resolve the situation” before shortages and increased costs hit, according to a copy of the letter seen by the Guardian.
Related: Liberty Steel misses accounts deadlines for major UK companies
“There are very few alternative sources worldwide for these types of aerospace steel and capacity is limited,” the letter said. “A significant problem with availability of these specialist steels is therefore anticipated once stock is consumed.”
Companies had provided steel suppliers including Liberty with customer guarantees, giving earlier notice of orders and speeding payment for products, ADS said. The letter was first reported by Sky News.
Rolls-Royce, the jet engine manufacturer, has put in a bulk order to Liberty Steel to give it enough steel to last it until the end of the year. The order allowed the company to restart production at Rotherham, according to union sources, after workers were furloughed to save cash.
Kwarteng has indicated that the government is considering options to step in to save Liberty Steel if it falls into administration or liquidation. On Tuesday, he said he was “very keen to see that these assets, which are good assets, continue to operate”.
However, Kwarteng has already turned down a request for a £170m loan from Gupta, citing concerns about Liberty’s opaque corporate structure. There are also concerns about the governance of the company, with questions raised over loans made by Greensill that were tied to invoices for “prospective” work with companies that did not have a relationship with Liberty. Accounts for the Liberty subsidiaries which hold key UK plants are overdue.
Liberty is also trying to see off legal action by Credit Suisse, a bank that backed Greensill, to wind up some of its operations in the UK and Australia.
ADS said: “We are in discussions with our members over any potential implications to our industries in the event that supplies from Liberty Steel were disrupted. All discussions are commercially confidential.
“It is in the interest of our industries for a solution to be found that ensures continuity of production at Liberty’s steelworks.”
