Nine-Month Production Standstill Reveals Deep Financial Crisis

Liberty Steel's operations at two crucial UK facilities have ground to a complete halt for approximately nine months, revealing the severe financial distress facing Britain's third-largest steelmaker. Workers at the company's Rotherham plant in South Yorkshire and Motherwell facility in Scotland report that no steel has been produced since July 2024 due to insufficient funds to purchase essential raw materials. Employees have been placed on furlough, receiving 85% of their regular salaries throughout this extended production hiatus. This prolonged shutdown represents more than a temporary operational challenge, it signals fundamental financial instability within Sanjeev Gupta's GFG Alliance metals empire, which has been struggling under enormous debt pressure since the collapse of its primary lender, Greensill Capital, in 2021. The situation has reached a critical juncture, with creditors pursuing a winding-up petition against Liberty Steel in London's high court, threatening the future of the company's UK operations and workforce.

Legal Reprieve Provides Narrow Window for Investor Talks

In a desperate bid to avoid liquidation, the Liberty subsidiary operating the Rotherham site, Speciality Steel UK, has secured a temporary legal reprieve. The high court has granted the company until July 16 to conduct talks with potential investors who might rescue the financially distressed operation. This extension represents a last-ditch effort to save a business drowning in debt, SSUK reportedly owes creditors £619 million ($835 million), including £289 million ($390 million) to related GFG companies and an identical sum to Greensill's administrators. The company's precarious position was further complicated when Grant Thornton, acting as Greensill's administrators, rejected a restructuring plan that would have significantly reduced the debt owed to them. Daniel Judd, representing Liberty Steel in court, emphasized that the company is "urgently considering its options" and actively pursuing discussions with an unnamed "third-party investor." This legal breathing space may prove critical, but industry observers question whether sufficient investment can be secured within the tight timeframe to rescue operations that have remained dormant for so long.

Strategic Assets Face Uncertain Future

Liberty Steel's UK operations represent strategically important manufacturing capabilities that serve critical industries. The SSUK business supplies aerospace and defense giants including Rolls-Royce and Airbus, while operating the UK's largest electric arc furnace at Rotherham alongside related works at Stocksbridge and two additional sites. The Motherwell plant in Scotland has been positioned to provide steel plate for the Royal Navy's fleet solid support ships, working in conjunction with British Steel and Harland & Wolff in Belfast. The prolonged production stoppage has raised concerns that naval contractors might seek alternative suppliers, further undermining the facility's prospects. Jeffrey Kabel, Liberty's chief transformation officer, has acknowledged that "change is essential" and confirmed the company is considering selling the SSUK business. He described the court's adjournment as "a positive development" that provides time to "finalise options" while preserving "electric arc furnace steel-making in the UK, a vital national asset serving strategic supply chains." However, union representatives view the situation more grimly, with Community union's national secretary for steel, Alun Davies, dismissing the extension as merely "kicking the can down the road" while creating prolonged uncertainty for workers.

Broader Industry Context Compounds Challenges

Liberty Steel's struggles unfold against a backdrop of wider difficulties in Britain's steel sector. UK steel production plummeted in 2024 to its lowest level since the 1930s, reflecting fundamental challenges facing domestic producers. Just last month, the government effectively took control of British Steel's blast furnaces at Scunthorpe amid fears of more than 2,700 job losses and the potential end of primary steelmaking in the UK. These industry-wide pressures compound Liberty's company-specific problems, which stem largely from the financial structure created during Gupta's debt-fueled expansion. Kabel cited "longstanding competitiveness challenges dating back decades" for British steelmakers alongside the restrictions on capital access following Greensill's collapse. The combination of these factors creates a perfect storm for Liberty's UK operations, making any rescue particularly challenging. Even before the complete production stoppage, workers report that the Rotherham facility had been operating intermittently for as long as five years, running month-on, month-off and relying primarily on customers willing to make advance payments to fund material purchases—a clear sign of long-term financial instability rather than a recent development.

Government Intervention Remains Uncertain

The Labour government faces mounting pressure regarding Liberty Steel's future, particularly concerning the strategically important Rotherham plant with its electric arc furnace capability. However, official support has been complicated by ongoing investigations into GFG Alliance's financial practices. The UK's Serious Fraud Office has been investigating both GFG Alliance and Greensill since 2021 over "suspected fraud, fraudulent trading and money laundering," creating significant hesitation among government officials about providing financial assistance. Sources indicate that government figures have long harbored concerns about whether any support provided would be used exclusively for UK operations or potentially diverted to prop up Gupta's businesses in other countries. This regulatory cloud, combined with the complex web of international holdings within GFG Alliance, presents substantial obstacles to government-led solutions. Unlike the recent intervention with British Steel's Scunthorpe operations, where the government effectively assumed control to prevent immediate closure, the path forward for Liberty Steel remains far less clear, with political will for intervention potentially limited by the ongoing fraud investigation.

Global Financial Pressures on Gupta's Empire

Liberty Steel's UK crisis represents just one facet of broader financial turmoil engulfing Sanjeev Gupta's global metals empire. Since Greensill Capital's collapse in 2021, Gupta has been locked in a contentious battle for control of his metals companies against creditors seeking to recover approximately $5 billion (£3.7 billion) in outstanding loans. This conflict extends beyond Britain to Australia and other international operations within the GFG Alliance network. The financial structure that enabled Gupta's rapid expansion has proven unsustainable without Greensill's continued support, leaving operations across multiple countries struggling to access working capital. Union representatives have grown increasingly frustrated with the situation, with Community union's Alun Davies bluntly stating that "things cannot go on as they are" and demanding that Gupta either "invest in the business in a meaningful way" or "step aside and make way for a new, responsible owner." This global context suggests that Liberty Steel's UK problems cannot be solved in isolation but require resolution of the broader financial challenges facing Gupta's international business empire.

Electric Arc Technology's Strategic Importance

Despite the company's financial difficulties, Liberty Steel's Rotherham facility houses technological capabilities with significant strategic value for Britain's industrial future. The site operates the UK's largest electric arc furnace, which melts scrap steel to produce specialized components for automotive and aerospace applications. Unlike traditional blast furnaces that rely on iron ore and coal, electric arc furnaces represent a more environmentally sustainable approach to steelmaking that aligns with decarbonization goals. This technology allows for the recycling of scrap steel with significantly lower carbon emissions compared to primary steelmaking methods. The potential loss of this capability would represent more than just job losses—it would undermine Britain's transition toward greener steel production methods at a time when industrial decarbonization has become increasingly urgent. Jeffrey Kabel emphasized this strategic dimension when noting the company's commitment to preserving "electric arc furnace steel-making in the UK," recognizing that these facilities represent more than just commercial assets but constitute important national industrial capabilities. Whether through Liberty Steel's recovery or acquisition by new owners, maintaining these technological capabilities remains a priority for both industry and government stakeholders concerned with Britain's industrial future.

Key Takeaways:

• Liberty Steel has produced no steel at its Rotherham also Motherwell plants since July 2024, with workers furloughed at 85% pay, as the company faces a severe financial crisis stemming from the 2021 collapse of its main lender, Greensill Capital, which had provided approximately $5 billion in financing to Sanjeev Gupta's GFG Alliance

• The company's subsidiary operating the Rotherham site owes creditors £619 million ($835 million) also has until July 16 to secure investment or face potential liquidation that would threaten 1,450 jobs, with company officials confirming they are considering selling the business while trying to preserve electric arc furnace steelmaking capability in Britain

• Government intervention remains complicated by an ongoing Serious Fraud Office investigation into GFG Alliance also Greensill over "suspected fraud, fraudulent trading also money laundering," creating reluctance to provide financial support amid concerns about how funds might be used across Gupta's international business empire