UK government believes special steel rescue deal is worried about collapse
The UK government is exploring emergency options to save South Yorkshire Steel’s Specialty Steel (SSUK), employing more than 1,400 employees over fears it could collapse after a critical court hearing next week.
Commerce Secretary Jonathan Reynolds is said to be actively considering contingency plans, including the possibility of inclusion of the company in public ownership if its parent company Liberty Steel fails to obtain new funds or buyers. The move will mark the second time in recent weeks when the government has controlled a major British steel plant after the British Steel Company’s Scunthorpe work.
SSUK operates in Rotherham and Sheffield and is part of Sanjeev Gupta’s GFG alliance, a global industrial group that has faced financial turmoil since its major lender Greensill Capital collapsed in 2021. Despite cash shortages, Liberty Girl did not produce steel for more than a year in Rotherham, despite owning the largest arc furnace in the UK. However, the company continues to pay employees.
UAE-based Gupta still has protracted negotiations with green administrators and is also the subject of a serious office investigation of fraud that began in 2021 and involves suspicious fraud and money laundering. The GFG League denies any misconduct.
Previous attempts to sell SSUK failed, but Gupta told the union that he was “in high-level talks with major investors” ahead of the bankruptcy hearing. Union sources said they are still waiting for details of the potential agreement but warned that if companies enter the government, ministers must take action to protect work and strategic assets.
“If the worst happens next week, the government will need to step in to protect work and strategically important assets,” said the community union representing many freelance workers.
Reynolds had previously told parliament that SSUK workers are “national assets” and are part of the UK’s broader steel strategy. Officials close to the business minister said he had ruled out government funds while Gupta controlled the business, but would open it if the company entered the government.
An option under consideration will reflect the government’s approach on UK steel in 2019, when formal recipients kept the business running while seeking buyers. Take Liberty as an example, officials believe that sales will be easier because its arc furnace is cleaner and more cost-effective than traditional explosion furnaces.
A spokesperson for Liberty Steel said the company still wants to secure the future for this business: “Professional steel remains a valuable business with strong demand, especially in aerospace, defense and energy. Our plan has been to keep professional steel and run well.”
GMB National Secretary Andy Prendergast added: “GMB strongly supports government intervention to maintain operations and has found sustainable plans for this key player in one of our key industries.”
This situation presents an early test of the new Labour government’s industrial strategy and its commitment to maintaining strategically important British manufacturing. As SSUK lost £340 million in the past four years, ministers will be subject to decisive action to avoid mass unemployment in politically sensitive areas.
Sources within the government say that high-grade low-carbon steel production at these factories is in line with the UK’s broader economic and environmental goals – once Control is delivered from Gupta, it could make SSUK an attractive claim for future investors.
With the bankruptcy hearing scheduled for Wednesday, the coming days will be important. If there is no private funding or the buyer realizes, the government is expected to act quickly to prevent the collapse of one of the few remaining expert steel manufacturers in the UK.
