Scottish Liberal Democrat economy spokesperson Willie Rennie has written to the Finance Secretary to ask what will happen to Scottish Government financial guarantees in the event that the Lochaber aluminium smelter ceases to be a going concern or is sold by its owner Sanjeev Gupta.
The letter follows the recent publication of Alvance British Aluminium’s unaudited accounts, in which Gupta outlined “material uncertainties that cast significant doubt on the company’s ability to continue as a going concern”.
The accounts - which remain unaudited and are more than 16 months late - reveal that the firm lost £4m last year. Documents have yet to be filed for Simec Lochaber Hydropower, the renewable power scheme that feeds the smelter.
The statement blamed the latest losses on a “combination of higher alumina prices for its raw materials and lower demand for the company’s products because of the Covid pandemic”, adding that “given the company's past financial performance, arranging external funding is also expected to be difficult“.
A GFG Alliance spokesperson insisted the business was now profitable, as both metal prices and demand have “increased significantly” and that it remains on track to expand operations, with plans to develop recycling and manufacturing facilities.
Gupta acquired the Fort William smelter and its hydropower plant in 2016, making it part of GFG after a £330m deal, with the Scottish Government supplying a £586m guarantee to buy energy from the hydro plants.
However, documents filed at Companies House reveal that Gupta put just £5 towards the transaction.
The metal magnate’s business empire is currently under criminal investigation for suspected fraud and money laundering.
Rennie said: “These late and unaudited accounts are another worrying sign about the underlying health of the Lochaber smelter.
“Despite flashy promises of 2,000 jobs and a new billet plant nothing has materialised, even though the SNP government has provided hundreds of millions of pounds of financial guarantees.
“There is now a significant risk that the firm is either sold or collapses as a result of the losses at Lochaber and the wider group’s financial difficulties - the Scottish Government will need to set out what will happen to the financial guarantees that it has provided, what will happen to the workers at the plant and whether it will be taking an active role in securing new ownership and the future of the site.”
The UK Government recently pulled its guarantees made on £400m of loans from Greensill Capital to companies linked to Gupta.
UK regulators have launched an investigation into the accountancy firm responsible for signing off the accounts for Sanjeev Gupta’s steel companies.
The Financial Reporting Council also recently launched an investigation into King and King, the accountancy firm responsible for signing off the accounts for Gupta’s steel companies.
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