Liberty Steel will not restart melting at its electric arc furnace in Rotherham, Yorkshire, on 15 October, as previously planned.
High energy costs and a lack of financing have both contributed to the decision. Market sources and other producers suggest that rising energy costs have added around €120/t to the cost of producing steel using an electric arc furnace.
In a note to employees, Scott Jackson, melt shop manager, said the company is "working hard to establish a date for the recommencing of operations" and that employees would remain on 80pc flexible furlough, unless they have volunteered for the 65pc arrangement, where staff opt to take time off. Workers had been due to return on 13 October, ahead of the restart.
The company last month had said "activities to fund a restart of steelmaking in mid-October remain ongoing". Its inability to restart could increase financial pressure on the business, as it is not generating sufficient cash, sources suggest.
Workers are increasingly concerned by the financial situation. Liberty has been in talks with US-based White Oak to refinance Greensill debt for its UK and Australian operations, with White Oak looking to syndicate the refinancing to reduce its risk. But the talks are taking longer than expected and have been affected by falling prices for steel and iron ore.
US private equity firm American Industrial Partners said on October 1 that it had foreclosed on the shares of the Aluminium Dunkerque smelter that had been owned by the Gupta Family Group Alliance (GFG), which encompasses Liberty Steel. It acquired much of the company's senior and mezzanine debt. GFG has since said it will launch legal action against the company, claiming it had commercial arrangements in place to repay the company in full and provide additional support for the business.
