A four-point restructuring plan proposed by Liberty Steel UK puts greater emphasis on South Yorkshire, but could cost 440 jobs elsewhere in the country.
The company proposes to focus more on high value alloy steel production at Speciality Steels in Rotherham, Stocksbridge, and Brinsworth, as well as importing semi-finished products to feed rolling mills at Rotherham, Scunthorpe, and Dalzell in Scotland. This latter move will mean a reduction in primary production at Rotherham, but could mean the plant there will ultimately become a green steel facility producing up to 2m tonnes a year.
Meanwhile, operations at Newport in Wales and West Bromwhich in the Midlands are to be idled as part of the package of measures aimed at creating an entity more able to withstand challenging market conditions, serve strategic supply chains, and provide the foundation for a decarbonised UK steel industry.
Despite the injection of £200m of shareholder capital over the last two years, the production of some commodity grade products at Rotherham and downstream mills has become unviable in the short term due to high energy costs and imports from countries without the same environmental standards. Primary production through Rotherham’s lower carbon electric arc furnaces (EAFs) will be temporarily reduced while uncompetitive operating conditions prevail.
The company says its plans will forge a viable way forward for the business, provide a safety net to affected employees and help safeguard jobs in its wider workforce of 1,900 permanent employees, and up to 5,000 including contractors.
Jeffrey Kabel, Chief Transformation Officer for LIBERTY Steel Group said: “Refocusing our operations will set the right platform for LIBERTY Steel UK’s high-quality manufacturing businesses to adapt quickly to challenging market realities. The support of our marquee customers will enable us to produce high value, differentiated products through 2023 and beyond for strategic sectors such as aerospace, defence and energy. We remain committed to our longer-term growth plans in the UK including our plan to grow Rotherham into a 2 million tonne green steel hub.
“While our action is expected to regrettably impact the roles of some of our workforce we will provide a level of guaranteed salary and out placement opportunities through our unique Workforce Solutions programme as an alternative to redundancy. LIBERTY’s shareholder Sanjeev Gupta has supported the business through a very difficult period and remains committed to the workforce here in the UK and ensuring our lower carbon operations help deliver a sustainable, decarbonised UK steel industry.”
Meanwhile, Director General of UK Steel Gareth Stace said: “The restructuring announcement from Liberty Steel highlights the significant challenges UK steel companies face navigating the current harsh market conditions. There will naturally be concern regarding the 440 jobs potentially impacted, but this is unfortunately an ongoing risk that accompanies a persistently uncompetitive business environment here in the UK, further exacerbated by global supply chain difficulties.
“High energy prices have played an important role in the decisions announced today, with long-standing uncompetitive electricity prices having constrained UK investment and steel production for some time. This highlights again the need for government to fully address the UK’s structurally high industrial energy prices, looking beyond the important announcements made regarding the Energy Bills Discount Scheme earlier this week. It is crucial we also now see the development of a long-term decarbonisation plan for the sector, ultimately ensuring that the UK can be seen as an attractive place to invest in steel production.”
