UK’s last remaining aluminium smelter Lochaber fears extinction under Government scrutiny

The Finance Secretary of Scotland has been approached by the Scottish Liberal Democrat economy speaker, Willie Rennie, as she and other individuals are concerned as to what will be the financial guarantee that the Scottish Government might provide in the event of a complete shutdown of the Lochaber aluminium smelter or its auction by the owner Sanjeev Gupta.

Her letter is an outburst after the latest release of the unaudited accounts of Alvance British Aluminium, where Gupta had notified "material uncertainties that cast significant doubt on the company's ability to continue as a going concern".

The biggest revelation was that the firm had lost £4 million the previous year, and since accounts were unaudited for sixteen months, the truth is coming out so late, causing a lot of uncertainty. The Simec Lochaber Hydropower provides a renewable energy scheme helping in the smelter's operations, and its documents are yet to be scrutinised.

The statement focused on issues concerning the "combination of higher alumina prices for its raw materials and lower demand for the company's products because of the Covid pandemic", also advocating that "given the company's past financial performance, arranging external funding is also expected to be difficult ".

It was confirmed by a GFG Alliance spokesperson that the enterprise was now witnessing profit as both the prices of metals and requirements have "increased significantly", and it would stay undulated on its path to elevate operational scales with plans aiming at establishing manufacturing and recycling units. 

In 2016, Sanjeev Gupta agreed upon a £330 million deal to own the Fort William Smelter and its hydropower plant, marking the beginning of a Government partnership where Scotland would buy £586 million worth of energy from the hydro plants. 

Sanjeev Gupta's organisations and connected regulators are presently under investigation for fraud and money laundering. 

Willie Rennie elaborated: "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," she kept forward a practical point.

 "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," she sounded concerned as she narrated the entire scenario.

Currently, the UK Government has terminated its guarantee of a £400 million loan from Greensill Capital to the companies under Sanjeev Gupta's rule.

The UK regulators have investigated the accountancy firms responsible for drawing the accounts of the Steel Companies owned by Sanjeev Gupta.

Another crucial investigation is on its course as the Financial Reporting Council is analysing the accountancy firm King and King, responsible for attesting the accounts of Gupta's steel units.