GFG Alliance seeks to diversify funding, says operations running normally

London — UK-based GFG Alliance, the parent company of Liberty Steel and aluminum group Alvance, said March 5 it is making progress in discussions with financial institutions that can help diversify its funding, while its operations continue to run as normal.

The emailed statement sent to S&P Global Platts follows widespread market speculation over the financing arrangements of the steel, metals and energy group owned by UK-based entrepreneur Sanjeev Gupta and his family. This follows diverse media reports of financial difficulties at UK-based supply chain financier Greensill Capital (UK) Ltd, which is understood to have put up financing for GFG Alliance.

"Our operations are running as normal and our core businesses continue to benefit from strong market conditions generating robust sales and cash flows," a GFG Alliance spokesperson said. "Our operational efficiency program has improved profitability and we are making progress in our discussions with financial institutions that can help diversify our funding. We are keeping our employees up to date and will provide further updates as we deliver our plans."

GFG Alliance did not respond to specific enquiries on market indications that it may have recently altered its payment terms with suppliers and customers.

Still, one buyer who purchases flat steel products from European Liberty mills told Platts: "I'm anxious if I'll receive all the quantities that I ordered, I can only hope we'll get our material."

A Benelux source said that if Liberty runs into sourcing problems because of pre-payments required by some suppliers, prices may rise again soon.

Platts' daily Northern European hot-rolled coil assessment increased Eur1/mt on the day to Eur750/mt EXW Ruhr March 5, continuing at a 13-year high as demand rebounds and material remains tight. European mills are ramping-up slowly following closures due to the COVID-19 pandemic and EU import levels are relatively low.

Rapid expansion

Greensill's London headquarters did not respond to S&P Global Platts' telephone and email requests for clarification March 5.

GFG Alliance has expanded rapidly in recent years in both steel and aluminum, including via the acquisition of troubled assets. Last year it acquired the Ascoval and Hayange steel mills in France, originally part of British Steel, as well as assets in the US and India.

The group now has a steel rolling production capacity of around 18 million mt/year. Gupta said late last year the group plans to boost its aluminum production capacity to about 1 million mt/year within the next two years from nearly 600,000 mt/year at present, mainly by investments in Europe.

Recent talks involving GFG Alliance on a potential purchase of major German steelmaker thyssenkrupp Europe and of aluminum producer Alcoa's San Ciprian smelter in Spain however failed to reach a satisfactory conclusion.