The Royal Navy faces uncertainty over whether three new warships will be built with British steel as Liberty Steel Dalzell, the only UK mill capable of producing the required plates, grapples with unpaid bills, late wages and a winding-up petition from the national energy operator.
Liberty Steel Dalzell, a plate mill in Motherwell, Scotland, has struggled to pay its bills and workers in recent weeks, according to several people with knowledge of operations. The National Energy System Operator (Neso) filed a winding-up petition against the company last month, according to public court records. The debt, thought to be for electricity transmission charges, is understood to have been repaid and the petition will be withdrawn.
The Dalzell plant holds an order for 34,000 tonnes of steel plate to build the Royal Navy's fleet solid support (FSS) ships. The three 216-metre vessels, designed to carry munitions, food and other supplies for the Royal Fleet Auxiliary, are due to be built in Belfast by Spanish state-owned shipbuilder Navantia under a £1.6bn contract, with the first planned for delivery in 2031.
The financial difficulties of Liberty Steel Dalzell and its owner, the Gupta Family Group (GFG) Alliance controlled by metals tycoon Sanjeev Gupta, have cast doubt on whether the plates will ever be made. The mill's output has been limited for two years because of shortages in working capital. Navantia has already said it would build the first ship largely in Spain because the Harland & Wolff shipyard was not yet ready. The longer Dalzell goes without producing steel, the more likely Navantia is to source the metal elsewhere.
Workers' pay packets have been late twice in recent months, including at the end of October. Staff are also concerned because pension provider Aviva said it was "currently unable to accept further pension contributions into the workplace pension plans for members of this scheme". A GFG spokesperson said the company was "engaging with Aviva and the Pensions Regulator to fix this as quickly as possible". It is also understood the company providing security to the Dalzell site walked away over the weekend after its bills went unpaid.
Unions have called for the government to protect the plant. Alasdair McDiarmid, general secretary of the Community union, said: "We need to see a viable plan for Dalzell's long-term future – the workforce deserve nothing less. If Liberty cannot produce this now, the case for government intervention will be unavoidable. We simply cannot afford to lose this crucial asset for Scotland, and for the entire UK steel sector."
A government spokesperson said: "This has been a difficult situation for the staff and local community supporting Liberty Dalzell. We want to see the company operational once more, and are closely monitoring the situation. Navantia UK has a 'local first' policy when it comes to suppliers for the fleet solid support programme. Ministers have encouraged Navantia UK to use UK suppliers, including for steel, where possible."
The Dalzell plant has produced some plate in recent weeks using steel said to have been sourced from Kazakhstan, but that is not suitable for the defence contract. A GFG spokesperson said: "Like the rest of the UK steel industry, Dalzell faces tough operating conditions with energy costs far higher than the prices its international competitors pay. Despite that the plant has restarted and GFG are pursuing new commercial deals to bring more volume through the mill. The Navantia contract remains in place and Dalzell's UK slab supplier has indicated capacity from early next year."
Gupta's businesses have been under financial pressure for several years because of the collapse of his main lender, Greensill Capital, in 2021. Companies within GFG remain under investigation by the UK's Serious Fraud Office for suspected fraud, fraudulent trading and money laundering.
Analysis
Why This Matters
- The Dalzell mill is the only UK facility capable of producing the specialised steel plates needed for three new Royal Navy supply ships, meaning its financial distress threatens the strategic objective of building warships with British steel.
- A collapse of the plant would not only jeopardise the £1.6bn Navantia contract and the revival of Belfast's Harland & Wolff shipyard, but also remove a critical asset from the UK's defence industrial base.
- Thousands of jobs across the UK steel supply chain, as well as workers at Dalzell itself, face an uncertain future if the mill cannot secure long-term viability.
Background
Liberty Steel Dalzell is a plate mill in Motherwell, Scotland, owned by the Gupta Family Group (GFG) Alliance, a metals and mining conglomerate controlled by Sanjeev Gupta. The mill has been a cornerstone of UK steel production for decades but has suffered from chronic working capital shortages for two years. GFG has been under severe financial pressure since the 2021 collapse of its main lender, Greensill Capital, and remains under investigation by the UK Serious Fraud Office. The Dalzell plant was awarded a contract to supply 34,000 tonnes of steel for three fleet solid support ships being built by Navantia at the Harland & Wolff shipyard in Belfast.
Key Perspectives
Community union (Alasdair McDiarmid): called for a viable long-term plan for Dalzell, warning that "the case for government intervention will be unavoidable" if Liberty cannot produce one, adding the UK "simply cannot afford to lose this crucial asset."
UK government spokesperson: said ministers want the company operational and are "closely monitoring" the situation, adding that Navantia UK has a "local first" policy and that ministers have encouraged it to use UK suppliers including for steel.
GFG Alliance spokesperson: said the plant faces tough operating conditions with high energy costs but has restarted and is pursuing new commercial deals, stating that the Navantia contract "remains in place" and a UK slab supplier has indicated capacity from early next year.
What to Watch
- Whether Navantia begins sourcing steel from outside the UK for the FSS ships, particularly after the first vessel is built largely in Spain.
- The outcome of the Serious Fraud Office investigation into GFG companies, which could trigger further financial or legal trouble for Liberty Steel.
- Whether the government intervenes directly, as unions have urged, to secure Dalzell's future and protect the navy's supply chain.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedThe Royal Navy’s British-steel supply for the new warships is in doubt as Dalzell struggles.World news | The Guardian: “The Royal Navy is facing questions over whether three new warships will be built with British steel as its Scottish supplier faces deepening financial difficulties.”
- SupportedDalzell’s financial difficulties raise questions about whether the three new fleet support ships will be built with British steel.World news | The Guardian: “The Royal Navy is facing questions over whether three new warships will be built with British steel as its Scottish supplier faces deepening financial difficulties.”
- SupportedDalzell has struggled to pay bills and workers in recent weeks, according to people with knowledge of its operations.World news | The Guardian: “Liberty Steel Dalzell, a plate mill in Motherwell, has struggled to pay its bills and workers in recent weeks, according to several people with knowledge of operations.”
- SupportedNeso filed a winding-up petition against Dalzell last month, according to public court records.World news | The Guardian: “The National Energy System Operator (Neso), the government body in charge of keeping the lights on, filed a winding up petition against the company last month, according to public court records.”
- SupportedDalzell is the only UK mill capable of producing the required plates.World news | The Guardian: “The Dalzell mill is the only one in Britain capable of producing the plates needed”
- SupportedDalzell has an order for 34,000 tonnes of steel plate for the ships.World news | The Guardian: “The Dalzell plant has an order to make 34,000 tonnes of metal plate to build the navy’s fleet solid support (FSS) ships.”
- SupportedMcDiarmid said: “We need to see a viable plan for Dalzell's long-term future – the workforce deserve nothing less. If Liberty cannot produce this now, the case for government intervention will be unavoidable. We simply cannot afford to lose this crucial asset for Scotland, and for the entire UK steel sector.”World news | The Guardian: ““We need to see a viable plan for Dalzell’s long-term future – the workforce deserve nothing less. If Liberty cannot produce this now, the case for government intervention will be unavoidable. We simply cannot afford to lose this crucial asset for Scotland , and for the entire UK steel sector.””
- SupportedAviva said it was “currently unable to accept further pension contributions into the workplace pension plans for members of this scheme”.World news | The Guardian: “the pension provider Aviva said it was “currently unable to accept further pension contributions into the workplace pension plans for members of this scheme”.”
- SupportedA GFG spokesperson said the company was “engaging with Aviva and the Pensions Regulator to fix this as quickly as possible”.World news | The Guardian: “A GFG spokesperson said the company was “engaging with Aviva and the Pensions Regulator to fix this as quickly as possible”.”
- SupportedA government spokesperson said ministers had encouraged Navantia UK to use UK suppliers, including for steel, where possible.World news | The Guardian: “Ministers have encouraged Navantia UK to use UK suppliers, including for steel, where possible.””
- SupportedA GFG spokesperson said Dalzell faces tough operating conditions because its energy costs are far higher than those of international competitors.World news | The Guardian: ““Like the rest of the UK steel industry, Dalzell faces tough operating conditions with energy costs far higher than the prices its international competitors pay.”
- SupportedSteel used to produce some Dalzell plate in recent weeks was said to have come from Kazakhstan and was not suitable for the defence contract.World news | The Guardian: “The Dalzell plant has produced some plate in recent weeks, using steel that is said to have been sourced from Kazakhstan, but that is not suitable for the defence contract.”