DUBAI – Liberty House Group is closer to taking over Australia’s steel producer Arrium, as the London-based steel manufacturer and metals trader is completing the purchases of units of Tata Steel and Rio Tinto in the UK.

“We’re in the second round on Arrium, we’ve been shortlisted among four bidders,” Sanjeev Gupta, 45, executive chairman of Liberty House, said in an interview in Dubai.

Global steel producers, including Arrium, have been pressured by rising exports from China, maker of half the world’s steel, which have weighed on prices and eroded profits. Liberty House, with steel operations from the UK to Africa, has been pursuing a strategy to acquire distressed assets.

Australia is the biggest exporter of iron-ore, the raw material needed to make steel. Liberty House wants to revive UK steel manufacturing and expand into the US, with an eye on producing metal from scrap parts rather than from iron ore, Gupta said. The UK probably has almost one-billion metric tons of steel in existing infrastructure such as bridges that can be recycled into other products through mini mills, he said.

“Australia should be a powerhouse of steel because it’s endowed with the best natural resources as far as steel is concerned,” Gupta said. “There is an opportunity to recycle steel in the UK because at the moment we export all our scrap. There’s also a lot of room for steel growth in the US where quite a lot of scrap is still exported. There’s room for more mini mills in the US.”

UK STEEL
Liberty House plans to boost its UK steel production to five-million metric tons within five years, from about 3.3-million tons now, Gupta said. The company is conducting due diligence on the purchase of Tata Steel’s UK specialty steels business for 100-million pounds ($125 million), with plans to complete the deal by the end of February, he said. The business has capacity to produce about 1.3-million tons of liquid steel that can be turned into parts used in the automotive and aerospace industries.

Liberty House expects to complete the acquisition of Rio Tinto’s aluminum and hydroelectric plants in Scotland on Friday, a deal valued at 330-million pounds, Gupta said. The smelter has capacity to produce 50 000 t of aluminum, and Liberty House plans to use about half that output to make aluminum alloy wheels for car companies, he said.