SteelOrbis talked to Sanjeev Gupta, Executive Chairman of Liberty House Group about their ongoing investments in various parts of the world and the company’s GREENSTEEL strategy.
Could you please inform our readers about Liberty’s journey to become one of the leading steel companies with a global presence?
Liberty’s journey as a business began 26 years ago with its launch in the UK as a commodities trading business that eventually established a global footprint across more than 30 countries and over 200 sites. The knowledge and networks we gained from our trading activity gave us a solid foundation for the global industrial business we began to create with our first steel asset acquisition in the UK approximately five years ago. That business now encompasses the UK, EU, US, Australia and extending shortly into India, Japan and South East Asia. The Group’s industrial workforce will soon reach nearly 20,000 people. The journey was based on a vision to create a smarter and more sustainable future for industry and society. Over the past five years we’ve steadily acquired strategic assets along the whole value chain; from the power-generating capacity that drives our furnaces and mills through the downstream manufacturing operation that turns our metals into high-value components and our financial services division that invigorates the markets in which we operate. We now produce both primary and secondary steel and roll the full range of steel products, together with primary aluminum smelting all of which are integrated into value-added downstream operations serving sectors such as automotive, aerospace, oil and gas and construction. Our growth is driven by our GREENSTEEL strategy which combines the recycling of steel with the application of renewable energy to create an environmentally and economically sustainable metals sector across key economies of the world. Looking forward we aim to continue to grow as a global metals and industrials group, though it will continue to be on the basis of de-coupled integration which means that we will benefit from collaboration between our different operating divisions but each one must be profitable and sustainable in its own right.
In both aluminum and steel, we are making strong links to downstream, added-value manufacturing which other companies don’t. With our energy investments we are optimizing mature assets or harnessing new technologies in order to generate low carbon, lower-cost power, and in banking our strategy is based on a clear gap in the market for supporting mid-market industrial companies. Each division has a reason why it is succeeding. By applying a different strategy and model we are reviving previously struggling assets and increasing the success of other assets which were trading normally before we acquired them. We chose a different model and are investing to make more use of lazy assets and they are already making money.
Could you tell us about your GREENSTEEL strategy? Where are you in terms of five million tonnes of annual recycled steel target by 2020?
While many others have given up on the steel in the developed countries, we have strong conviction that steel has central place in these economies and can be made profitable through our GREENSTEEL strategy. This means making steel in a competitive and low-carbon way through recycling our abundantly available supply of scrap in electric arc furnaces powered by renewable energy. Our UK target is to install or commission enough capacity in the UK over the next 5 years i.e. by 2023 to make five million tonnes a year of GREENSTEEL. At present we have available liquid capacity of 1.3 million tonnes at Rotherham and we aim to add to that by investing in new capacity at strategic locations around the UK. We will use existing infrastructure and refurbished plant where appropriate but will also be investing in newly-built arc furnaces and casting facilities.
One of your latest additions to your steel business is the Whyalla operations in South Australia. How is the expansion work going in your Australian steel operations?
We have identified almost A$2 billion worth of investment projects to improve the operational and financial performance of Whyalla and secure its long-term sustainability, including reducing ferrous feed costs, improving energy efficiency through co-generation and capturing process off-gases, modernizing and upgrading the steelworks and rolling mill, increasing production to 2 million mt per annum, broadening the range of products we produce to capture new , specific steel value added markets, increasing iron ore reserves, unlocking large-scale magnetite potential and exploring the development of Whyalla Port into a world-scale, multi-user facility. So far things have been progressing well. We’ve already started increasing output towards our first milestone of 1.2 million tonnes per annum and in May have made our first shipment to slab to our plant in Newport, South Wales which will take much of this initial uplift in output. We’ve also purchased the Tahmoor mine in New South Wales to ensure a reliable source of coking coal for Whyalla at stable prices, which will help underpin our growth. We expect to roll out the rest of our plans over the next two years.
You mentioned in May, your plant in Whyalla supplied slabs for Liberty Steel Newport. When do you plan to commission liquid steel and slab making facilities at the Newport plant?
We are in advanced stages of discussions and hope to be in a position to sign off this investment in the near future. From the point of sign-off we estimate it will take around 18-24 months to install the melting and casting facilities.
You are preparing to commence production at the Georgetown wire rod mill in South Carolina. Considering the Section 232 tariffs, you will have a great opportunity, as you now have a presence in the US. Have you predicted this outcome and revised your plans regarding the Georgetown plant accordingly?
Our decision to acquire and recommission the Georgetown plant was taken well before any tariffs were announced and our plans for the site are being implemented as originally conceived. That is completely independent of the tariff decision. We firmly believe all investment strategies should be based on fundamental market forces and be sustainable in their own right, irrespective of any government interventions.
You submitted a bid for the financially stressed Indian steelmaker Bhushan Power & Steel and the rumor is that you are also eyeing five business units of Tata Steel Europe. What is your acquisition plans going forward? Do you have any intention to invest in Turkey, for example?
We have an extensive investment program in view for several key regions of the world and we are on record as saying we intend to invest heavily in industrial assets in India. We will be entering new territories in due course, but we will talk about which ones when the time is right.
Your parent company GFG Alliance invested in an energy company in Australia. Has it improved your energy costs?
Just to correct your description of the GFG Alliance. This isn’t a parent company as such but rather a coalition of companies in my family’s ownership who work closely together around a common vision. Liberty House is a member company of that alliance. Through fellow GFG member company SIMEC ZEN Energy we’ve been investing in the development of large scale renewable power assets in Australia which will over time deliver low carbon, lower cost energy for our industrial activities there. In the shorter term SIMEC ZEN Energy has secured several groundbreaking agreements, for example SIMEC ZEN has signed a number of other significant contracts, including the recent deal with the South Australian Government and French-owned renewable energy provider, NEOEN.
Where is Liberty today in its digital transformation journey, in terms of CRM, logistics operations efficiency, integration with customer systems, cyber security.. etc? Are there any new services you are providing to your business partners?
Businesses across the group are investing in new technologies in support of their digital transformation. New core ERP’s are being implemented in acquisitions in the UK with legacy solutions replacements (both ERP and MES) underway in Australia. In line with Industry 4.0, improved automation, machine-to-machine and human-to-machine communication, artificial intelligence, continued technological improvements and digitalization in manufacturing targeting improved efficiency in our operations and supply chain. We are currently implementing Microsoft Office 365 across the group as a global collaboration platform, including video, audio and document storage/sharing. Our customers & suppliers will see direct benefits from these investments as we continue to open our systems up for both self-service and direct integration and make it easier to do business with us.
Any final comments?
The expansion program we have undertaken in recent years has been ambitious and, in some respects, audacious, but I believe time is demonstrating that our judgment call was correct and that there is a bright future for metal manufacture and industrial operations in the developed economies. We remain convinced of that and intend to step up our investments in the months and years ahead. Those investments will not only include acquisitions and capital expenditure but investments in innovation and the development of a skilled workforce for the future.