Lochaber aluminium smelter’s valuation scales up by £100 million, while GFG Alliance investment remains little: Scottish Liberal Democrats

The liberal, federalist political party in Scotland, Scottish Liberal Democrats asserted that Sanjeev Gupta’s GFG Alliance has comprehended the valuation of Lochaber aluminium smelter scaled up by£100 million, which was acquired from Rio Tinto Alcan and a very small amount was further invested.

Willie Rennie, the party’s spokesman for the economy said, “Sanjeev Gupta's collection of businesses in the energy, steel and trading paid £330m in 2016 for the aluminium smelter and hydro-electric plant in Fort William.”

“They are currently valued at £438m - making the businessman a gain of £108m - with very little investment or effort from the company.”

The Scottish Government also backed GFG Alliance’s acquisition of the aluminium smelter with a guarantee nominally valued at £586m.

 “GFG Alliance is laughing all the way to the bank with the Lochaber smelter deal with the SNP Government”, added Rennie.

As per the details of the Freedom of Information request, it is revealed that in return for the guarantee, Liberty Aluminium Lochaber, part of GFG Alliance, pays the Scottish Government a commercial fee.

The Freedom of Information interpreted, “Since 2016, Liberty Aluminium has fulfilled all its power purchase and guarantee fee obligations, and there has been no call - and therefore no resulting public expenditure - against the Scottish Government guarantee.”

It also affirmed that GFG’s Liberty Aluminium Lochaber pays annually the Scottish Government between £14 million and £28 million for the life of the guarantee.

“The Scottish Government’s guarantee helped secure the future of the businesses at Lochaber. They are now operating profitably and have created 40 new jobs since 2016, increasing direct employment in the complex to 200 jobs while supporting a valuable supply chain with hundreds of associated jobs”, a Scottish Government spokesperson said.

“The business remains committed to investing in the long term future of the site. There has been no call on the guarantee and the value of the security package held by the Scottish Government concerning the Lochaber guarantee exceeds its financial exposure according to Treasury Green Book analysis prepared by independent advisers.”

“The net present value of the remaining power purchase agreement revenue stream over the remaining 20 years is £286m, while the companies’ valued the assets at Fort William at £438m in their 2019 accounts.”

A spokesperson of GFG Alliance said, “The Lochaber aluminium smelter remains a profitable operation. GFG Alliance’s continuing commitment to the operations and to investing in new recycling and aluminium billet plant will secure their longer-term future, create new high-quality employment in the area and provide opportunities for the local supply chain.”

“These expansion projects, which recently received consent from the local planning authority, will further bolster Lochaber’s role as a hub for green aluminium production – thanks to its hydro-electric facility integrated with the wider estate, the plant already produces some of the lowest carbon aluminium on the market.”