A major contract to supply steel for three new Royal Navy warships has been thrown into uncertainty due to a severe cash shortage at the Scottish steel mill tasked with fulfilling the order.
Production Paralysis at Dalzell
Liberty Steel's Dalzell plant in Motherwell, Scotland, has been unable to begin full-scale production for a 34,000-tonne order of metal plates, despite winning the contract to supply Spanish shipbuilder Navantia. The plates are essential for constructing three 216-metre Fleet Solid Support (FSS) ships for the Royal Fleet Auxiliary.
According to sources familiar with the situation, the mill lacks the cashflow to purchase the necessary steel slabs from British Steel. While workers continue to receive 80% of their salaries, production has been minimal. Small trial runs in November processed only about 1,000 tonnes, equivalent to roughly three days of normal output.
Calls for State Intervention and a Troubled Tycoon
The financial woes at Dalzell are a symptom of the continued troubles facing businesses owned by metals magnate Sanjeev Gupta. His GFG Alliance empire has been under severe pressure since the collapse of its key lender, Greensill Capital, in 2021. Gupta lost control of Speciality Steel UK in South Yorkshire in August after it was deemed "hopelessly insolvent."
Sir David Murray, a prominent Scottish industrialist and former owner of Rangers FC, has called for the UK government to step in. He suggests pressuring Liberty Steel to relinquish control of the Dalzell plant and has previously expressed his willingness to take over the business. Murray estimates that with a £50 million investment for raw materials and working capital, the plant could be profitable within two years.
The Dalzell mill has not filed accounts for five years, and Gupta is facing prosecution for failure to file accounts, alongside a long-running fraud investigation by the Serious Fraud Office.
Broken Promises and a Strategic Imperative
The Scottish government originally brokered the sale of the plant to Gupta in 2015, lending him £7 million. This decision was partly based on his promises to revive the Alvance aluminium smelter in Fort William and open an aluminium car wheel factory. The wheel factory never materialised, and the £7 million loan remains outstanding.
Murray, who tried to buy the plant in 2015, criticised the ongoing inaction. "We cannot going forward rely on importing everything," he stated, highlighting that the mill is just 17 miles from potential customers like Harland & Wolff in Belfast, which is building the FSS ships.
The first of the three support ships, RFA Resurgent, is scheduled for delivery in 2031. The contracts were intended to bolster UK employment and supply chains. A restart at Dalzell would also provide a vital order for British Steel's loss-making Scunthorpe plant, which is now under government control.
A spokesperson for Liberty Steel said the plant "is fulfilling" the Navantia order and that trial production runs "are expected to shortly resume." They cited "positive momentum" from the contract and pointed to recent UK trade actions as beneficial for future production. Navantia UK declined to comment.
