Government takes control of UK’s third-largest steelworks amid spiralling debts

THE UK’s third-largest steelworks has been placed under government control after efforts to secure financial backing for its mounting debts failed.

Speciality Steel UK (SSUK), which has plants in Rotherham and Sheffield, supports around 1,450 workers and was part of the international steel manufacturing giant Liberty Steel.

Liberty Steel has faced ongoing difficulties repaying SSUK's debts, which have reached £619m (US$831m) since the start of the year.

The British High Court found that the firm was “hopelessly insolvent”, with only £600,000 in the bank and a monthly wage bill of £3.7m.

SSUK focuses on primary and secondary electric arc furnace (EAF) steelmaking, primarily processing scrap steel into high-grade components for industrial clients such as Rolls-Royce and Airbus.

UK steel production

Steel production in the UK has fallen significantly, with UK Steel revealing that in 2023, national output dropped to 5.6m t while demand fell to 7.6m t.

According to the International Steel Statistics Bureau, the decline in UK steel production is largely driven by rising international competition and challenges associated with EAF steelmaking.

Earlier this year, Tata Steel shut down its last blast furnace to make way for an EAF, resulting in the loss of 2,800 jobs.

However, large-scale EAF steelmaking presents its own challenges, chief among them, securing a consistent supply of scrap steel. SSUK has not produced any steel since last July, citing insufficient capital to purchase raw materials.

Next steps

Liberty Steel has called the High Court’s decision “irrational”, claiming it had secured an investment plan to rescue the business from insolvency.

Gareth Stance, the director general of UK Steel, said: “UK Steel welcomes the government’s recognition of the importance of the Liberty Specialty Steel assets and hopes that a new owner is found quickly and can inject the investment and working capital required to return production volumes to previous levels.”

As part of the winding-up process, the government has agreed to cover the firm’s wage bill while it seeks new buyers.