Liberty restructuring points to reduced melt shop activity

The United Kingdom-based Liberty Steel Group business unit of the GHG Alliance has spelled out a restructuring plan for its U.K. steel operations that indicates it will be cutting back on its scrap melting activities.

Among changes listed by Liberty are a shift in focus to “high-value alloy steel production” at its sites in Rotherham, Stocksbridge and Brinsworth, U.K., and a reduction in melt shop production in Rotherham to be “replaced by imported billet and slabs to feed rolling and finishing lines [in] Rotherham, Scunthorpe and Dalzell” in the U.K.

The scaling back of melt shop activity could be temporary, with Liberty also listing as a priority “a commitment to restart commodity production and idled plants when the market and operating conditions allow and a longer-term aim of growing Rotherham into a 2 million metric tons per year green steel facility.”

In 2020, Liberty hosted U.K. politicians at its scrap-fed Rotherham electric arc furnace (EAF) plant, saying the 500,000-ton-per-year plant will help reduce the U.K.’s reliance on steel rebar imports and help “recycle the surplus of scrap metal recovered in the U.K.”

Two years before that, in 2018, Liberty announced it intended to “further boost production at Rotherham to over 1 million metric tons annually through investments to expand its product mix and making more productive use of its rolling mills to target attractive market segments.”

In the first quarter of 2021, however, Liberty and the GHG Alliance encountered financial turmoil in the aftermath of the collapse of Greensill Capital. A subsequent cash flow problem that reportedly affected scrap purchases contributed to a March shutdown of the Rotherham melt shop.

In October of 2021, after the firm established a Restructuring and Transformation Committee, GFG Alliance announced it would “inject” about $65 million of funding into Liberty Steel UK in part to enable the restart of the Rotherham EAF mill.

The newest changes, Liberty says, occur “in the face of the U.K. steel industry’s severe competitiveness” and have been announced as “the next phase” of the company’s restructuring program.

“Despite the injection of $244 million 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," the company adds. "Primary production through Rotherham’s lower carbon EAFs will be temporarily reduced while uncompetitive operating conditions prevail.”

The announcement does not indicate where Liberty will purchase its imported billets and slabs from and whether it will seek out steel with a reduced carbon footprint.

“Liberty’s shareholder Sanjeev Gupta has supported the business through a very difficult period and remains committed to the workforce here in the U.K. and ensuring our lower carbon operations help deliver a sustainable, decarbonized U.K. steel industry,” says Jeffrey Kabel, chief transformation officer of Liberty Steel Group.