Liberty House committed to melting steel at Newport

UK metals firm Liberty House remains committed to its plan to produce liquid steel at its site in Newport, south Wales, executive chairman Sanjeev Gupta said.

Liberty will initially install one electric arc furnace (EAF) with a capacity of 1mn t/yr to feed the 1.2mn t/yr rolling mill, before ramping up to 2mn t/yr with another EAF. The first furnace will take a few years to become a reality, Gupta said.

The acquisition of the Bird Port export terminal earlier this year, adjacent to the Liberty Steel Newport (LSN) plant, facilitates the installation of hot melting as well as being a logistical hub for other users. Currently around 90pc of Bird Port's throughput is comprised of hot-rolled coil (HRC) for export, and Liberty has a plan to almost double throughput.

"Bird port, LSN and the rail and development of new warehousing — all of this is basically to become a separate independent business, a logistical multi-modal hub to serve the region, not just us. That is the broader plan," Gupta said.

The second Newport EAF will enable downstream capacity expansion at the Newport mill. Liberty had intended to relocate its Sheerness facility — previously owned by Saudi Arabia's Al-Tuwairqi Group under the banner of Thamesteel — to Newport, but this has not worked out.

"Rolling mills by themselves are tough, it is a really low margin business, especially with the cost base you have [in the UK]," Gupta said. "To reinstall a bar rolling mill is not cheap, to make money out of it is not easy."

There is demand for the rebar in the UK, where independent fabricators bemoan the fact there is only one domestic producer. But the gap cannot necessarily be filled easily and depends on the plant being competitive, he said.

The Newport coil rolling mill is only operating at around a third of its capacity, given the thin margins between slab and HRC. "The real capacity utilisation will come when we make our own slab, because importing it and rolling it is a thin margin business. It is okay, it washes its face, makes a bit of money, but its real future is in making its own slab," Gupta said.

Liberty's plate mills in Scotland are also underutilised given the "difficult proposition" posed by operating non-integrated rolling mills. There is a plan to upgrade the Dalzell facility in Motherwell to produce API plate, which could feed the company's Hartlepool mill in northwest England, which makes large-diameter pipes for the oil and gas industry. "When we bought [Hartlepool], it was basically shut, it was on its last legs. I was not expecting it to ramp up as quickly as it has. The uptick in the oil market has helped but it is doing really well — it cannot keep up with its demand," Gupta said. Hartlepool is currently fed with imported plate.

Australian upgrade

Liberty also plans to upgrade its OneSteel mill in Australia to produce API grade slab, which could feed its Scottish plate mills. The Australian site has already shipped slab to Newport, and around half of its around 400,000 t/yr production could be served by OneSteel going forward.

"As we expand the capacity in Australia, LSN will become a key customer, until one day it has its own slab production," Gupta said.

The acquisition of seven sites from Luxembourg-based steelmaker ArcelorMittal complements the company's existing business, giving it HRC production in three sites and broadening its product offering to the UK and Europe. "It is basically an extension of the strategy to have competitive steel plants in strategic locations. Europe is a strong market and will remain so. So to have a good prominent position in the middle of it is a privilege," he said. Liberty's focus on Europe has intensified because of Brexit, according to Gupta.

Asked whether Liberty might be interested in any tinplate assets European joint venture ThyssenKrupp Tata Steel has to divest, Gupta said: "This our space, so anything that comes up in this space we will definitely look at, including those." ArcelorMittal's Steelton plant in the US is also one of the "coals in the fire", he said.