Sanjeev Gupta of Liberty House: We are currently evaluating investment opportunities on all continents

Wednesday, 26 April 2017 17:35:52 (GMT+3)   |   Istanbul
       

Mr. Gupta, could you inform our readers briefly about the operations of Liberty Steel, with information on mills and capacities? 

The Liberty House Group, which is celebrating its 25th Anniversary this year is a global trading and industrials business with a presence in around 30 countries. It has a long and strong track record as a successful trader in steel and non-ferrous metals but in more recent years it has also been building its metals manufacturing and high-end engineering footprint, particularly in the UK where it owns almost 30 sites ranging from liquid steel production facilities, through rolling activities and a wide range of engineering operations making high-value products for the automotive, aerospace, energy and construction markets in particular.

Our plants are based in South Wales, Scotland, the English Midlands and soon Yorkshire and Lancashire also. Liberty is now one of the biggest independent industrial employers in the UK with more than 4,500 staff and is one of the largest suppliers to the country's motor industry. We are also at an advanced stage in our strategy to acquire industrial assets in North America and Australia and are actively pursuing similar investment opportunities elsewhere across the global.

At the heart of our mission is the GREENSTEEL strategy which focuses on competitive low-carbon production of metals and engineered products using recycled scrap, melted and processed in plants powered by renewable energy. In this we work closely with SIMEC, our sister energy company in the GFG Alliance.

You had mentioned in a previous interview that Liberty's Greensteel strategy is vital for UK steel as eighty percent of steel consumed in the UK is imported from overseas. Could you comment on the acquisition of Tata Steel UK's Specialty Steels business from that perspective?

The acquisition of the Speciality Steels business will be important to us for a number of reasons, including its capacity to produce a range of high-value steels which integrate well with our growing network of advanced engineering businesses. 

From the viewpoint of our GREENSTEEL strategy this acquisition is very significant in that it gives us access to 1.3m tonnes a year of melting capacity in two electric arc furnaces based at Rotherham. Melting and upcycling a substantial proportion of the UK's growing supply of domestic scrap is an important part of our GREENSTEEL strategy. Over the next decade, the supply of UK scrap is projected to rise from 10 million to 20 million tonnes a year. More than 70% of current supply is exported so clearly there is an opportunity to melt more of that at home, adding value and creating jobs.

Again, regarding the Greensteel strategy, what volume of metal do you plan to recycle in five years?

Our target is to have 5 million tonnes of melting capacity in the UK within the next five years with arc furnaces strategically located around the country close to our rolling mills and engineering plants. Longer-term we aim to power all of these operations using renewable energy.

The group has also acquired the Rio Tinto hydro-electric facilities and aluminum smelting operation in Lochaber, Scotland. Can you explain to our readers your group's aim in making this acquisition?

This is the last remaining aluminium smelter in the UK and we saw a unique opportunity to add value to its output by locating aluminium-based downstream activity at the site. We are already in the process of developing an auto-components plant there initially focused on making alloy wheels, a product that is currently 100% imported by the UK vehicle manufacturing industry. This is a big opportunity that we are looking forward to delivering.

The use of hydro-electricity to power these activities gives us a very cost-effective source of energy and makes a major contribution to our core strategy to produce metal through low-carbon methods.

The group's investment in Wyelands Bank seems very interesting given the vital importance of capital for heavy industries. What was the motivation behind this move?

My family's aim with this investment is that the Bank should help create a more fertile environment for the growth of British industry by specialising in supply chain and trade financing for small and medium-sized enterprises (SMEs). We believe strongly in the revival of British industry and have now introduced a new champion to underpin those industrial businesses which have vision and ambition.

In my view, Britain needs a bank specialising in the industrial SME sector that will be a friendly source of finance to oil the wheels of industry; stimulating growth and the creation of quality jobs. Such businesses need better working capital funding solutions and, with a first class management team at the helm, Wyelands Bank will provide those solutions.

Liberty House has become a fast-growing group thanks to its latest acquisitions. We would like to learn if you have other investments planned for the future.

Yes we will continue to look for industrial investment opportunities both upstream and downstream in the UK and globally. In particular, we are looking for businesses that will give us the scale we need and will also complement existing businesses. It's fair to say that we are currently evaluating investment opportunities on all continents.

What are your views on the situation in the global steel markets after the Brexit decision and the election of Donald Trump?

We tend to take an optimistic view and look to the new trade opportunities that we believe Brexit will create. We look forward to the UK capitalizing on the new freedoms we will enjoy.

We are certainly encouraged by the fact that the UK Government is giving a renewed priority to the creation of an industrial strategy; something we haven't really had for some years.

Regarding the election of Donald Trump, we are encouraged by his declared determination to revitalize American industry, including steel and engineering. We see that as providing new opportunities for competitively priced American steel and, as such, we are looking to invest in that market.

Many expect Turkish steel mills to benefit most from Brexit after the completion of the UK's exit procedures. Do you agree with this view? What changes do you expect for the UK import market? Who will be the major players post-Brexit?

Whoever may benefit in the short term we see Brexit ultimately as a platform for the UK itself to become more self-sufficient in the production of steel. As a foundation industry, it must form an important part of the British Government's emerging industrial strategy. That is one of the reasons why we are aiming to build melting capacity and more downstream capacity.

Any final comments for our readers?

There has been a lot of negative thinking and negative comment regarding the steel and engineering industries in recent times. However, we see this as an era of great opportunity for businesses that are prepared to think differently and come forward with new competitive business models.

Yes: there is a lot of over-capacity in the industry globally but, ultimately, the demand is not going to go away so it is a question of capitalizing on that demand in an intelligent and sustainable way.


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