UK Government Weighs Rescue Package for Speciality Steel UK as Administration Looms

Ministers are poised to intervene in the potential rescue of another major steel facility as Speciality Steel UK (SSUK) faces a critical insolvency hearing next week. Business Secretary Jonathan Reynolds is examining options to safeguard the Liberty Steel Group subsidiary, which provides employment for 1,450 workers across its Rotherham and Sheffield operations.

The government’s contingency planning includes the possibility of assuming complete control of the enterprise, marking the second instance of state intervention in the steel sector following the takeover of British Steel’s Scunthorpe facility from its Chinese ownership.

SSUK’s financial health has deteriorated significantly, with losses reaching £340 million over four years. The Rotherham plant, despite housing the UK’s largest electric arc furnace, has remained dormant for twelve months due to insufficient working capital, though staff wages continue to be paid.

The company’s parent organisation, GFG Alliance, headed by Sanjeev Gupta, has encountered severe financial turbulence since the collapse of its primary lender, Greensill Capital, in 2021. The lending relationship involved approximately £3.7 billion in facilities, and administrators are actively pursuing recovery.

Labour representatives in South Yorkshire have intensified their appeals to the Business Secretary for enhanced support. The government’s stance remains cautious, with Reynolds indicating openness to financial intervention only if Gupta relinquishes control following next week’s hearing.

Industry analysts suggest the government might replicate the British Steel rescue strategy, appointing an official receiver to maintain operations while seeking potential buyers. The presence of efficient electric arc furnaces at SSUK’s facilities makes them particularly attractive to prospective investors, contrasting with the more challenging proposition of Scunthorpe’s aging blast furnaces, which require substantial modernisation investment.