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An international group of businesses has seen the value of a Scottish smelter they purchased increase by more than £100 million, while making very little investment, Scottish Liberal Democrats have claimed.
The party’s economy spokesman, Willie Rennie, said that GFG Alliance – a collection of businesses in energy, steel and trading centred around businessman Sanjeev Gupta – paid £330 million in 2016 for the aluminium smelter and its associated works in Fort William
The smelter and its assets, including land and a hydro-electric plant providing the smelter’s power, are currently valued at £438 million – a gain of £108 million.
When the smelter was bought, the Scottish Government backed it with a guarantee nominally valued at £586 million.
GFG Alliance is laughing all the way to the bank with the Lochaber smelter deal with the SNP Government
Willie Rennie Scottish Lib Dems
“GFG bought Lochaber for £330 million but the assets have now been valued at £438 million, with very little investment or effort from the company.
“That’s quite a return on their investment, which was backed by a £568 million SNP Government guarantee.”
Details from a Freedom of Information request show that in return for the guarantee, Liberty Aluminium Lochaber Ltd, part of GFG Alliance, pays the Scottish Government a commercial fee.
The FOI says: “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.”
The FOI says that Liberty Aluminium Lochaber Ltd annually pays the Scottish Government between £14 million and £28 million 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 £286 million, while the companies’ valued the assets at Fort William at £438 million in their 2019 accounts.”
GFG Alliance has been contacted for comment.