One of Britain’s largest steel companies has pledged to more than quadruple its steel-making capacity in the UK over the next five years as it continues its break-neck expansion.

Liberty House owner GFG Alliance has said it aims to increase its UK steel-making capacity to 5m tonnes a year from the current 1.1m tonnes in a strategy which could create hundreds of jobs.

If GFG achieves its target – which would require hundreds of millions in investment – then the company would be responsible for almost half the UK’s current total steel production.

The industrial group says its plan – which has not yet been funded and is part of its “Greensteel strategy” – would contribute to the “clean growth” initiatives laid out in the Government’s Industrial Strategy by slashing the amount of raw steel imported to the UK and dramatically increasing the amount of scrap steel which is recycled.

Jay Hambro, GFG chief investment officer, said the company would use electric arc furnaces part-powered by renewable energy to melt scrap steel so it can be reused, a process which is more environmentally friendly than primary steel-making in a blast furnace powered by coal.

“That link between energy and industry has been at the heart of our own ‘Greensteel strategy’ and we are greatly encouraged to see public policy going strongly in this direction.

“Greensteel, made using renewable energy, has only one tenth of the carbon footprint of blast furnace production and should form a key part of the clean growth focus.”

Mr Hambro said that while the Industrial Strategy singled out electric cars for development, these vehicles will still need steel to be built and GFG’s strategy will help provide a clean source of this.

GFG calculates that at the moment about 6.6m tonnes of raw steel are imported to the UK and 7.2m tonnes of scrap steel are exported.

The company believes that the UK is missing out on the opportunity to improve its environmental performance by reprocessing more scrap steel. It says Britain generates 10m tonnes of scrap steel a year, a level GFG claims is the highest of any developed economy and an amount which, on current trends, looks set to rise to 20m tonnes within a decade.

GFG – largely through its Liberty House arm headed by entrepreneur Sanjeev Gupta – has been expanding at a break-neck pace for the past two years and is now one the UK’s largest private industrial companies with about 5,500 staff.

 

The company first came to public attention when it reopened a mothballed steel plant in Newport at the height of the steel crisis which sent shockwaves through the sector in 2015. The crisis saw the collapse of some companies in the sector and others cutting jobs and selling assets.

Since then, GFG, which also owns Simec, has been on a £1bn-plus spending spree which has included snapping up assets from steel heavyweight Tata, the remnants of the collapsed Caparo industrial empire, and Rio Tinto’s aluminium smelter and hydro power plant in Scotland.

In Australia Liberty has purchased steel and mining business Arrium Group, which employs more than 5,500 staff.

Some have questioned how Liberty finances the distressed assets it buys, questioning the logic of buying businesses which others have been unable to make work.