Scottish Liberal Democrat economy spokesperson Willie Rennie is urging acting Finance Secretary John Swinney make a statement to Parliament following the late accounts from owners of Lochaber smelter Alvance British Aluminium, which showed a £4m loss last year.
Mr Rennie maintains “it is looking more and more likely the Government was duped” as unaudited accounts from GFG‘s Alvance British Aluminium division and signed by owner Sanjeev Gupta raise major doubts concerning the smelter’s future.
The accounts note “material uncertainties that cast significant doubt on the company’s ability to continue as a going concern,” with Mr Rennie maintaining there is now a “significant risk” the firm is either sold or collapses.
The letter notes: “I am writing to ask you to set out what will happen to those financial guarantees and whether your government will be taking an active role in securing new ownership and the future of the site.
“I would like to urge you to deliver a statement to parliament on this matter at the earliest possible opportunity. This is a matter of significant public interest and one which should be properly scrutinised by parliament.”
‘Very surprising’ accounts not audited – Tony Mackay
Last week Inverness-based economist Tony Mackay raised questions surrounding the future of the Lochaber smelter, noting it was “very surprising” the accounts were not audited by registered accountants, although GFG said the publication of accounts for the year to end of March 31 2021 was “an interim step.”
Mr Rennie added in his letter to the Finance Minister: “Sanjeev Gupta, a significant financial partner of the Scottish government, is sending a warning signal the company may collapse as a result of the losses at Lochaber and the wider group’s financial difficulties.
“The Scottish government provided hundreds of millions of pounds of financial guarantees in exchange for the promise of 2,000 jobs at the site.
“However, a spokesperson for your government admitted last week just 40 new jobs have been created since 2016.”
The Scottish Liberal Democrat economy spokesman added despite “flashy promises of 2,000 jobs” and a new billet plant, nothing has materialised and it is “looking more and more likely the government was duped.”
Mr Rennie is pressing Holyrood to set out what will happen to the financial guarantees provided and the future of the workers at the plant, while asking whether or not the government will be taking “an active role” in securing new ownership.
SNP must report to Parliament with urgency”
– Willie Rennie
Publication of the annual figures at Companies House comes after the Financial Reporting Council (FRC) watchdog launched an investigation into King & King, which audited previously published accounts for Alvance British Aluminium, the registered name of the smelter operation.
And while accounts for the Fort William-based business have finally been published more than 16 months late, documents have not yet been filed for Simec Lochaber Hydropower, the renewable power scheme nearby that feeds the smelter.
According to Companies House, these remain almost a year overdue which means the company is subject to paying fines.
Collapse of Greensill complicates situation
Mr Mackay said it was likely GFG would seek to sell the smelter facility although this would be complicated due to its current difficulties in the wake of the collapse of its former lender Greensill Capital.
He said: “I believe it is certain some other company will take over the smelter from GFG Alliance but it is difficult to know when that will happen.
“GFG will obviously hope to get money from any sale/transfer but I think that is unlikely given the doubts over their parent company’s financial future.
“The transfer will also need the agreement of Highlands and Islands Enterprise (HIE) and the Scottish government because of their loan guarantees.”
Intervention has supported livelihoods of hundreds of people – Scottish government
A Scottish government spokesman noted: “The Scottish government’s intervention to support the Lochaber aluminium smelter has preserved strategic industrial capacity and supported the livelihoods of hundreds of people.
“Since 2016, GFG has created 40 new jobs in Lochaber, increasing direct employment to 200 jobs and supporting a valuable supply chain.
“The Scottish government receives a commercial fee in respect of the Lochaber guarantee and guarantee fee payments are up-to-date.
“There has been no call on the guarantee and the Scottish Government holds a comprehensive suite of securities over the assets at Lochaber that have been valued at more than the outstanding amount guaranteed.”
A GFG Alliance spokesperson said: “The Lochaber smelter is performing profitably despite the impact of high energy prices and our plans to nearly double capacity on site with a new recycling and billet casting plant remain firmly on track.
“As plans to expand progress, with the project already in front-end design and engineering, this will drive further spend in the local and national economy, and enable us to target rising demand for Lochaber’s low carbon aluminium.
“We will continue to invest to improve productivity, upgrade existing facilities and safeguard jobs for the long term.”
The accounts from Alvance British Aluminium also cover in part, the Covid period.
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