GFG Alliance has seen the value of a Scottish smelter it purchased increase by more than £100m, while making very little investment, the Scottish Liberal Democrats have claimed.
The party’s economy spokesman Willie Rennie said that Sanjeev Gupta’s collection of businesses in 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” according to Rennie.
When the smelter was bought, the Scottish Government also backed it with a guarantee nominally valued at £586m.
Rennie said: “GFG Alliance is laughing all the way to the bank with the Lochaber smelter deal with the SNP Government.”
Details from a Freedom of Information request show that in return for the guarantee, Liberty Aluminium Lochaber, part of GFG Alliance, pays the Scottish Government a commercial fee.
“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,” read the FoI.
It also states that Liberty Aluminium Lochaber annually pays the Scottish Government between £14m and £28m for the life of the guarantee.
A Scottish Government spokesperson said: “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.
“The business remains committed to investment 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 in relation to 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 GFG Alliance spokesperson said: “The Lochaber aluminium smelter remains a profitable operation.
“GFG Alliance’s continuing commitment to the operations and to investing in a 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.”
Rennie responded: “The workers have been let down as has the taxpayer who have repeatedly funded the SNP Government’s failed industrial intervention policy – from BiFab to Fergusons to the Chinese deal and Lochaber, the SNP Government’s record is a shocking one.
“The SNP Government have been very secretive over Lochaber and should now come clean on their plans to get GFG to stick to their promises on thousands of extra jobs.”
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