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Sanjeev Gupta's Belgian factories may shut down amid disputes with unions

Europe / Ferrous metallurgy
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The restructuring of Liberty Steel's steel plants in Belgium was blocked by a local commercial court decision at the request of unions and minority investors.

Sanjeev Gupta's Belgian factories may shut down amid disputes with unions

The Liège Commercial Court in Belgium has rejected a plan to restructure Liberty Steel's Belgian assets and ordered the liquidation of its subsidiary Liberty Liège. According to local media reports, the investment company Sogepa, owned by the district of Wallonia, and local trade unions were involved in the legal proceedings.

In June 2021, the management of Liberty Liège received a loan through Sogepa to further develop the business. And since September, the company has been negotiating the sale of a 49% stake in Sogepa, a Liege enterprise, in exchange for additional financial assistance.

Liberty has had problems with its Belgian operations since last spring, when it began demanding prepayments for steel products and even canceled earlier orders.

The problems with the Belgian assets were preceded by a scandal involving a creditor to British parent company Liberty Steel, GFG Alliance.

Liberty Liège includes the Flémalle and Tilleur production sites in Belgium, each producing cold-rolled coil, hot-dip galvanized coil and tinplate.

Liberty Steel said it was "disappointed" by the Wednesday April 13 ruling and said it would appeal.

"We continue to believe our transformation plan delivers a long-term, sustainable future for the business and saves 650 jobs," a spokesperson for Liberty said.

The Tilleur plant can produce 200,000 tons of cold-rolled steel and tinplate per year, while Flémalle has two galvanizing lines with a capacity of 950,000 tons per year, producing hot-rolled and cold-rolled galvanized steel.

The packaging line at Tiller was restarted on February 14, 2022, while the galvanizing lines at Flemalle have been idle since December 2021 due to a lack of raw materials.

Liberty's site plan includes the development of a new business model for Tilleur's tinning line, including closer partnerships with major customers for specialty packaging, and the use of Flémalle's G5 galvanizing line to generate short-term profits.

Liberty's parent company, GFG Alliance, claims to have provided more than €80 million in funding to Liberty Liège since July 2019, of which €28 million has been provided since December 2021.

GFG said its long-term investment plans for Belgian plants were undermined by the declining steel market in 2019, the impact of the Covid-19 pandemic in 2020-21, and the resulting supply chain disruption, and now the war in Ukraine .

The Liberty Group acquired the Liège sites from ArcelorMittal in 2018.

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