Britain’s biggest aerospace employers, including Rolls-Royce Holdings and Airbus, have urged the business secretary to step into the crisis engulfing the steel tycoon Sanjeev Gupta amid fears of a global shortage of specialist materials.
Sky News has learnt that the industry association ADS has written to Kwasi Kwarteng to highlight its members’ reliance on the specialist steels produced by Mr Gupta’s GFG Alliance group at its UK plants.
In the letter, which was sent last week by the ADS interim chief executive Kevin Craven, Mr Kwarteng was told that the industry had become deeply concerned about the continuity of steel supply required for its members’ engineering and manufacturing operations to continue.
Mr Kwarteng has said his department would continue to closely monitor the situation
ADS’s members also include Bombardier, Safran and Spirit AeroSystems.
Its letter to Mr Kwarteng stopped short of requesting that financial aid be granted by the government to GFG’s Liberty Steel operations, but warned that there were “very few alternative sources worldwide for these types of aerospace steel”, according to one industrialist who has seen it.
The ADS plea specifically referred to concerns about production at GFG’s facilities in Rotherham and Stocksbridge, which are big suppliers to the aerospace sector.
It also highlighted the risk of rising costs and lengthy delays to source equivalent steel products from elsewhere because of issues relating to certification and traceability, the executive added.
The aerospace industry’s plea to Mr Kwarteng came three weeks after Sky News revealed that GFG had written to ministers to seek a £170m emergency loan to stave off collapse.
Ministers rejected the request on the basis that they could not be sure that the funds would not be used to prop up other parts of Mr Gupta’s international empire.
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Gupta tells workers: ‘I will not give up on you – you are my family’
Questioned by MPs on the business, energy and industrial strategy select committee this week, Mr Kwarteng said his department would continue to closely monitor the situation.
“Let’s see if he [Mr Gupta] can refinance his business in the way that he said he would,” he told the committee.
An ADS spokesperson declined to comment on the letter to Mr Kwarteng, but said: “We are in discussions with our members over any potential implications to our industries in the event that supplies from Liberty Steel were disrupted.
“All discussions are commercially confidential.
“It is in the interest of our industries for a solution to be found that ensures continuity of production at Liberty’s steelworks.”
GFG has been brought to the brink of financial collapse by the implosion of Greensill Capital, the supply chain finance lender which fell into insolvency several weeks ago.
If Mr Gupta’s group does fall over, it will raise doubts about thousands of British steelmaking jobs at GFG and in its supply chain.
GFG is working with advisers at Alvarez & Marsal and PJT Partners to identify new sources of funding.
Liberty Steel employs 30,000 people globally
The government is being advised by Deloitte, the accountancy firm.
The collapse of Mr Gupta’s group would be sensitive for Boris Johnson’s administration, with the businessman’s plants located in politically important areas such as Hartlepool, Newport and Rotherham.
Liberty Steel, which employs 30,000 people globally, is a key supplier to industries such as aerospace through its speciality steel operation.
Its approach to ministers made GFG the fourth UK steel producer to request state support in recent years.
British Steel collapsed into compulsory liquidation in 2019, before being bought by Jingye of China.
Tata Steel, the UK’s biggest steel manufacturer, has been holding talks with officials for almost a year about a package of taxpayer support, although no deal has been agreed.
The only company to have benefited from taxpayer support under the Project Birch initiative to support businesses hit by the pandemic is Celsa, a Welsh-based steelmaker.