What insight into the future of Arrium in Whyalla can be drawn from looking at Liberty Steel’s operations in Scotland?
The British company, run by billionaire entrepreneur Sanjeev Gupta, is revitalising the South Australian steelworks after they went into voluntary administration.
ABC Radio Adelaide‘s Sonya Feldhoff was recently given the opportunity to tour one of Mr Gupta’s acquisitions in Scotland.
In April 2016, Liberty House Group — part of Mr Gupta’s GFG Alliance — took over the mothballed Dalzell plate mill in Motherwell and Clydebridge plant in Cambuslang.
The plants had been shut down a year earlier with more than 200 workers laid off.
“Sanjeev saw an opportunity to restart the mothballed plant,” Liberty Steel Group’s Iain Sinclair said.
The plant was renamed Liberty Steel and more than 120 workers were re-employed to begin production.
It’s a situation similar to that facing South Australia’s Arrium steelworks, which was placed into administration in April 2016. Mr Gupta has since committed more than $1 billion to revitalising the works.
Local community galvanised
After 18 months in limbo, Dalzell mill workers said they began to see a rejuvenation in their town when the plant reopened.
“It was great to see there was a prospect for us,” shift manager Steve Tominey said.
“We believe in ourselves and it is great that someone else believes in us now.”
Mr Sinclair said the recommencement of work at the plant had galvanised the local community.
“By the middle of September last year we rolled our first plate and the new era of Liberty Steel [began],” he said.
Mr Sinclair said a large part of the plant’s renewed success was down to re-employing past workers.
“This business is only sustainable if we have the right people.”
The biggest issue the business had faced to date was an influx of cheap, imported materials, he said.
“As a domestic steelmaker, it became very difficult to offset some of the costs, so that was our principal challenge.”
Renewable energy’s role in manufacturing
Mr Sinclair said using sustainable and renewable energy sources would be key to the steelmakers’ success.
Liberty House Group has invested heavily in hydroelectric storage and planned to convert a coal-fired plant into a biomass power station as part of its long-term strategy.
By tapping in to renewable energies, Mr Sinclair said it would be possible to reduce exorbitant electricity costs experienced in the UK.
“If you can control all of your costs, it makes a sustainable business model.”
Mr Gupta has promised no redundancies at the Whyalla plant, and has ambitions to invest in pumped-storage hydroelectricity and other renewable energy sources there.
The company operates similar energy plants to power an aluminium smelter in Scotland.
“Renewable energies play very much into our green vision,” Mr Sinclair said.
“The assets in South Australia are so complementary to what we are doing here in the UK.”
Mr Sinclair added Mr Gupta was very much considered the saviour of the steel industry in Scotland.
“Sanjeev’s modus operandi is investing for growth, not just for survival.”