The Liberty Steel factories of British billionaire Sanjeev Gupta are far from London, but their possible shutdown due to financial difficulties of the "parent" company GFG Alliance will undermine British Prime Minister Boris Johnson's policy of "leveling" the country's poorer regions. This is stated in the editorial Reuters .
Despite pledging to release consolidated financials last year, Liberty has yet to do so, and its UK businesses' last published reports are several years old.
If GFG needs financial assistance, it is not realistic to expect it from European competitors. Despite the current surge in steel prices caused by a shortage of steel products due to the slow restart of production capacity by producers, the European steel market is struggling with overcapacity. The rivals could indeed win if GFG's plants, which produce more than 5% of Europe's annual steel production, were closed.
Consequently, the rescue of Liberty Steel will become a problem for the UK government. Boris Johnson will be under pressure from unions to demand funding for British steel mills or buy them out after debt restructuring. However, all of these “activities” can be costly. The UK steel market is uncompetitive, mainly because electricity costs are 62% and 86% higher than in France and Germany, UK Steel said.
"Given the troubles of the UK steel industry, Johnson should prepare for a long-term investment with uncertain yields," Reuters warned.
Let us remind you that on Tuesday the key financial partner of Liberty Steel is Greensill stated that Sanjeev Gupta's GFG has started missing scheduled debt payments. The finance group's lawyers said the GFG faced "serious financial difficulties." According to the Financial Times, this is at least $ 5 billion.
