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Crisis at Gupta steel operations threatens European production, unions warn

by SuperiorInvest

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The “irresponsible” management of steel magnate Sanjeev Gupta is threatening European production of the metal as concerns grow over the viability of several of his plants, a powerful bloc of unions has warned.

Two major union federations, IndustriALL Europe and IndustriALL Global, representing millions of workers, have called on the European Commission to establish a task force to address a “crisis” at the operations of Gupta’s Liberty Steel.

IndustriALL Europe represents 180 unions in 38 countries, while IndustriALL Global represents 800 unions in 140 countries. Together, the two federations represent 7 million workers across the manufacturing industry in Europe.

The unions have held a “crisis meeting” to warn against the “risk of Europe’s steel production capacities being severely damaged and the green steel challenge not being met due to Mr Gupta’s irresponsible management”, they said. it’s a statement.

They want Gupta to provide “full transparency” about the finances and refinancing of his European steel operations, which have been hit by production cuts and legal disputes amid a broader economic downturn in the region.

Many facilities at Gupta’s European steel plants have been idle for weeks due to financial problems with no clear prospects of restarting production as supplier invoices go unpaid and raw materials run out, unions said. The lack of “liquid capital” had caused a “historically serious crisis,” they added.

The call for intervention is the latest sign of trouble in the businessman’s growing GFG Alliance, a loose group of groups around the world that includes Liberty, the global steel and mining company.

GFG has been hit hard since the collapse of its main lender, Greensill Capital, in 2021. It then took a hit from high energy costs following the Russian invasion of Ukraine in 2022.

The group has come under scrutiny for its lack of financial transparency and is being investigated by the UK’s Serious Fraud Office. GFG denies any wrongdoing.

Since the collapse of Greensill, Gupta has been struggling to keep his business together.

Credit Suisse’s asset management arm told investors last month that a debt restructuring deal with GFG could not be implemented as expected after the steel group failed to make a payment on time, although it said talks were continuing. .

GFG said it was working towards a “consensual debt restructuring” with Greensill’s main creditors.

“There is a huge lack of transparency in this company. For years we have been promised consolidated accounts for GFG’s European plants to no avail,” said Judith Kirton-Darling, acting deputy general secretary of industriAll Europe.

“At the same time, they have been given a lot of state aid, and yet many plants are idle or falling apart. “We want to know where that public money has gone,” he added.

Gupta promised to present consolidated accounts for its steel business in 2019, but has not yet done so.

Many of Gupta’s blast furnaces have been idle, while a lack of available capital has led to the suspension of basic maintenance, according to unions.

The situation at the Gupta steelworks in Ostrava, Czechia, is considered especially critical, as production has been halted amid a dispute over unpaid energy bills.

GFG said the unions’ statement was “wrong and misleading.”

“Like all European steel producers, Liberty’s operations have been affected by high energy prices, high inflation and high imports, which has led to more than 20 percent of the continent’s primary steel is on hold.”

The company said it had a “solid restructuring plan” for Liberty Ostrava, which showed an “achievable path back to profitability and repayment of creditors.”

Despite these market challenges, Liberty has “continued to ensure that its employees are paid on time and that plants are safely maintained even when not fully operational,” the company added.

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