Welcome to TSS! [Switch to Carbon Steel]

Information Center

TSS NoticeIndustry News

GFG Alliance moves to consolidate steel, boost transparency

2019-10-10

London — GFG Alliance, owner of the Liberty House steel and metals group, said Monday it is planning to consolidate its steel businesses worldwide in "a more appropriate financial and legal structure" for an organization with its scope and scale.

The group is working on creating a new corporate structure that will hold GFG Alliance's steel businesses, which are presently separate units around the world, a spokesman for the group said in a statement. The steel businesses, including downstream assets, have a combined turnover of more than $10 billion, out of a total group turnover recently put at more than $20 billion.

"There will be a single balance sheet and a single set of accounts but within this, our businesses will continue to be managed with a high degree of autonomy," the spokesman said.

In May, GFG Alliance's Chief Investment Officer Jay Hambro told S&P Platts that the group is looking to set up operations in India and China, at the same time as consolidating its portfolio of businesses in the UK, the US and Australia.

The group has considered IPOs of steel operations in both Australia and the US, but has postponed the Australian offering that it was looking at earlier this year because of market conditions, the spokesman said Monday.

"However, we are always open to capital market transactions as part of our broader strategy," he added.

Last month, Liberty officially inaugurated seven European steelworks and five major service centers which it bought from ArcelorMittal in a Eur740 million ($707 million) deal, giving Liberty a total rolling capacity in excess of 18 million mt/year and making it one of the world's top 10 steel producers.

Despite currently flagging demand in the European steel markets, Liberty has said it aims to boost sales from these recently-acquired sites, with combined rolling capacity of more than 10 million mt/year and 6.3 million mt/year crude steelmaking capacity, by around 50% over the next three years, supplying steel to various European industries.

Last month, miner Rio Tinto triggered an arbitration process in relation to its sale last year to Liberty House of a 285,000 mt/year aluminum smelter in Dunkirk, France, for $500 million, alleging non-payment of around $50 million in post-closure adjustments. Liberty House told Platts at the time that there were claims on both sides.

The GFG Alliance spokesman said Monday that work on developing the new corporate structure is at an early stage but that it is looking to announce further details of the restructuring by the end of the year.

Source: S&P Global