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Supporting Document 1 – 24 August 2016 meeting
-----Original Appointment----- From: +MDOffice <[email protected]> Sent: 29 July 2016 16:27 To: +MDOffice; Sanjeev Gupta; Jay Hambro; Jon Bolton; Sean Parsons; Douglas Dawson Subject: Confirmed - Meeting with Sanjeev Gupta meeting First Minister and Mr Ewing When: 24 August 2016 14:00-14:45 (UTC+00:00) Dublin, Edinburgh, Lisbon, London. Where: First Ministers office, St Andrew’s House, Regent Road, Edinburgh, EH1 3DG
The calendar has been updated as per the email from [REDACTED] on 5th August confirming the new time of 14.00 start.
[REDACTED] – 08/08/16 [REDACTED] Diary Secretary 5th Floor | St Andrew’s House | Regent Road | Edinburgh | EH1 3DG | T: 0131 244 [REDACTED] Supporting Document 2 – 24 August 2016 meeting
From: [email protected] Sent: Friday, 15 July
2016 23:21 To: Sanjeev Gupta Cc: [email protected]; [email protected] Subject: Dalzell - Invitation to the First Minister
Dear Mr Gupta Mr Ewing informs me that you wish to invite the First Minister to attend the Dalzell opening and would welcome a meeting prior to this. I can confirm that the First Minister is content to both meet and attend the opening. I would be grateful if you could provide the relevant details for the opening and suggested meeting dates and I will ask the First Minister’s private office to liaise directly with you. Kind regards
[REDACTED][REDACTED] Portfolio Private Secretary to Cabinet Secretary for Rural Economy and Connectivity and
Minister for Transport and Islands
0131 244 [REDACTED] [REDACTED]
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Supporting Document 3 – 28 September 2016 official reopening of Dalzell
Programme:
First Minister Cabinet Secretary for Rural Economy and
Connectivity Minister for Business, Innovation and Energy
Event: Official Opening of Liberty Steel Dalzell Plant
Time: 09:30 – 10:45
Venue Contact: Colin Timmins [REDACTED]
Venue: Liberty Steel Works, Park Street, Motherwell, ML1 1PU
SG Contacts: [REDACTED] [REDACTED] [REDACTED]
[REDACTED] [REDACTED] [REDACTED]
Version: Final
Dress Code: Business Attire although PPE will require to be worn during the short tour of the works.
Media Opp: FM Comms will provide separate advice.
Event Description:
First Minister, Cabinet Secretary and the Minister for Business, Innovation and Energy will attend the official opening of the Liberty Steelworks in Motherwell. There will be a short tour of the works followed by the Official Opening ceremony at which the First Minister will speak.
Driver Details: [REDACTED]
Drop Off/ Pick Up: Main entrance, Liberty Steel, Park Street, Motherwell ML1 1PU. Ministers cars will park in the top car park and move forward to pick up on departure.
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Please give [REDACTED] a call on [REDACTED] 10
minutes prior to arrival.
09:30 First Minister, Mr Ewing and Mr Wheelhouse arrive and are greeted by Mr Sanjeev Gupta, CEO of Liberty Steel and escorted to the Boardroom for a short private meeting. The First Minister and Mr Gupta will both be presented with a gift by Colin Timmins to mark the opening of works. Photo Op at this point. 09:40 First Minister, Mr Ewing and Mr Wheelhouse are escorted on a short private tour of the works. There will be the opportunity to meet a dozen employees including apprentices, ex-Tata staff and a new employee who previously worked at Ravenscraig Steelworks. Photo Op at this point. 09:55 First Minister is piped into the Marquee and mingles with staff and other guests. 10:05 Welcome by Mr Gupta who invites his family and the First Minister to join him on stage for the Ganesh ceremony. 10:20 First Minister speaks from Lectern (fixed mic) and unveils a commemorative plaque on stage. 10:30 First Minister undertakes media bids. 10:45 First Minister departs.
EVENT ENDS
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Supporting Document 4 – 28 September 2016 official reopening of Dalzell
Rt Hon Nicola Sturgeon MSP
First Minister
Opening of the Dalzell plate mill
Wednesday 28 September 2016
Maximum length: 5 minutes
Bullet points
You are attending the official opening of the Dalzell plate mill by Liberty House Group. Your remarks will be preceded by a Ganesh Ceremony, which Sanjeev Gupta, Executive
Director of Liberty House Group, will introduce. After the ceremony, Mr Gupta will introduce you. You will speak and then unveil a plaque commemorating the re-opening. At the start, I have suggested making reference to the fact that Ganesh is the deity
renowned as the remover of obstacles, as this links neatly to the work required to reach this point. It’s possible that this fact will be referred to during the ceremony, but I think it is bears repeating.
I have not directly mentioned the Clydebridge site that Liberty also acquired, as there are no plans to re-open it in the short term. I have referenced briefly Liberty’s ‘Green Steel’ agenda, which prioritises sourcing from
UK scrap steel, the use of efficient, local energy sources, and boosting the UK manufacturing sector through innovation and technology.
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Supporting Document 5 – 19 December 2016 official handover of Lochaber smelter
BRIEFING FOR THE FIRST MINISTER
GFG Alliance Official Handover of the Lochaber Aluminium Smelter and Power
Stations
19 December 2016
Key message The sale of Rio Tinto’s assets to the GFG Alliance is great
news for the community and especially, for the 150+ people working at the Fort William smelter.
The uncertainty hanging over the workforce since January has been lifted; ending an anxious wait for the workforce and
all those whose livelihoods depend on the business.
This deal safeguards the existing jobs and has the potential to create hundreds more through planned investment.
The guarantee is designed to underpin long-term certainty
for the smelter around the cost of its energy and provides a stable platform for future viability and expansion.
This action signals our clear commitment to Scotland’s industrial infrastructure, to a highly skilled workforce and to
stronger sustainable economic growth. East Lochaber and Laggan Community Trust (ELLCT)
gained its 1000th member in September which is a good indication of the way in which the prospect of shared
ownership can galvanise local communities.
I am pleased to have secured the undertaking from the GFG Alliance to engage with the community about a community land transaction.
Now a new exciting chapter of industrial development is set to begin for Lochaber.
What Official handover of the Lochaber Aluminium Smelter and Power Stations to the GFG Alliance. Visits and Events will provide a full ops note for the visit.
Why To welcome the official handover of the Lochaber Aluminium Smelter and Power Stations to the GFG Alliance and show the
Scottish Government’s continued support for the company and the industry in Scotland.
Who The event will be hosted by Sanjeev Gupta CEO Liberty House and Jay Hambro CIO SIMEC
Where Lochaber Smelter, Fort William, PH33 6TH
When 10 December 2016 10:00-11:00
Media Liberty House will issue a press release. SG Comms will provide a quote from the FM. Comms will provide a comms note/plan for the visit.
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Supporting
officials
[REDACTED] [REDACTED] [REDACTED][REDACTED](Comms) [REDACTED][REDACTED](FM Events) [REDACTED]
Attached
documents
ANNEX A AGENDA ANNEX B BIOGRAPHIES AND LIBERTY HOUSE ANNEX C BACKGROUND
ANNEX D LETTER OF UNDERTAKING ANNEX E EAST LOCHABER AND LAGGAN COMMUNITY TRUST
ANNEX A
AGENDA
09.45 Guests arrive / refreshments served 10.00 Rt. Hon. Nicola Sturgeon, First Minister of Scotland, arrives
10.05 Welcome by Jay Hambro, Chief Investment Officer of the GFG Alliance 10.10 Guest of Honour address by Rt. Hon. Nicola Sturgeon, First Minister of Scotland
10.20 Address by Sanjeev Gupta, Executive Chairman of the GFG Alliance, and presentation of plaque to the First Minister
10.25 Ganesh ceremony and plaque unveiling 10.30 First Minister meeting Lochaber employees
10.40 GFG Alliance flag raised and photo opportunity 11.00 First Minister departs
11.05 Employee address by Sanjeev Gupta and presentation of plaque to Cabinet Secretary for the Rural Economy and Connectivity Mr Ewing
11.10 Cabinet Secretary for the Rural Economy and Connectivity Mr Ewing addresses Lochaber employees 12.30 Guest departures
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ANNEX B BIOGRAPHIES
Mr Sanjeev Gupta, Executive Chairman
Mr Gupta comes from a very successful industrial and business family and has applied his background and
experience to grow the trading business globally. He traded various commodities in Asia, Middle East, Europe and Africa, establishing and developing the Liberty brand and its global network. Since 2000, Mr Gupta’s focus has
been on growing the trade in steel, metals and raw materials while developing the industrial asset base of the Group. Mr Gupta graduated from Cambridge in 1995 and
was awarded his Masters from Trinity College Cambridge.
Mr Jay Hambro, Chief Investment Officer
Liberty House Group
Liberty House Group is a steel products company founded in the UK in 1992 by Sanjeev Gupta while studying at Cambridge University. The company is part of the
Gupta Family Group Alliance which also runs SIMEC (Shipping, Industrials, Mining, Energy & Commodities) and GFG Investments. Originally based on selling chemical products to Nigeria, Liberty consolidated its focus into metals and steel trading in 2005. The group comprises of Liberty Commodities (delivering innovative trade and
supply chain solutions, including finance options) and Liberty Industries Group (integrated steel manufacturer and distributor). Liberty House Group operates in over 30 countries and employs approx. 3,000 people globally, with a current estimated turnover of $4.3bn / £3.25bn.
Strategic Objectives
Liberty’s strategic vision focuses on its “Green Steel” agenda. It has three broad objectives to ensure the UK steel market:
Produced in the UK from UK materials - almost 80% of steel products
imported and almost 100% of iron ore and coal imported. Green steel aims to move the industry to 100% manufactured in the UK from scrap steel using only
local energy sources.
After graduating in business management, Mr Hambro began his career in resource finance with NM Rothschild & Sons, before
moving to the investment bank of HSBC. He then joined what is now the Petropavlovsk plc group before spearheading the development of their industrial commodity divisions as CEO of Aricom plc (FTSE listed) and more recently as Chairman of IRC
Limited (HKEx listed). Mr Hambro joined GFG Alliance in January 2016 with a remit of growing the worldwide interest of SIMEC as well as leading the development of the Group’s property and
financial arm.
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Manufactured from Green Power - UK imports 60% of energy-generation fuel.
Green steel uses low cost, local energy sources (biomass conversions, tidal
lagoon power) to create large scale solutions for energy usage. Adding value to the UK economy - creating UK based engineering jobs,
growing UK innovation & technology and placing UK steel back into the centre of UK manufacturing.
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ANNEX C BACKGROUND
The Lochaber aluminium complex is the UK’s last remaining aluminium smelter (the bulk of the UK’s aluminium demand is met by imports) and the operation is a key component of Scotland’s industrial capability and a major source of employment in the West Highlands. Although relatively small by global standards the smelter has
benefitted from recent investment and its carbon emissions are significantly lower than the global average. In September its owners Rio Tinto decided to sell its Lochaber business and entered
into exclusive commercial negotiations with a preferred bidder (the GFG Alliance ) these negotiations have now successfully concluded. The sale comprises of three elements – the aluminium smelter at Fort William, two hydro power stations (Fort William and Kinlochleven) and extensive estate lands (c.115,000).
While the business as a whole is profitable RTA had considered options to dispose of the assets separately. The Government’s focus was to avoid the fragmentation of the Lochaber complex, to secure the long-term viability of the aluminium smelter and
to realise further industrial and employment opportunities on site. Total employment of the combined Rio Tinto operation is significant, supporting 306 jobs in Scotland – the majority of whom receive wages higher-than-average for the region (averaging £33,000 per FTE, compared with the Highlands and Islands average of £23,253 for
all jobs and £29,627 for all full time jobs). If RTA had not secured a buyer for its entire Lochaber operation as a going concern, the Government understood the present owner would [REDACTED]
Basis of Government Support
The Scottish Government recognised that the smelter presented a more challenging commercial prospect than the hydro power stations alone. This had to be factored
into capital raising considerations for any purchaser with plans to own and develop the Lochaber complex in its entirety as a going concern To enhance options that preserved the integrity of the current configuration – and
reinforce the essential link between the smelter and hydro at Fort William – the Government signalled in September a willingness to support any purchaser who would make the necessary commitment to the local community in relation to employment, industry and sustainable development. The offer included the potential
to guarantee the power purchase obligations of the aluminium smelter. The Government’s offer was made known on an even-handed basis to all short-listed bidders and communicated with the full knowledge and support of the vendor RTA.
Rationale for intervention
The Government’s readiness to consider options for support springs from its commitment to Scotland’s industrial and commercial infrastructure and its ambitions
for sustainable economic growth as outlined in the Government Economic Strategy, the Manufacturing Action Plan and Labour Market Strategy. Ministers’ strong preference was for the Lochaber complex to remain intact and to continue in
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operation for the long-term with further industrial and economic development activity stimulated on site.
Scotland’s industrial sector boosts national productivity, sustains high-skilled and well-paid employment and produces positive local and national economic spill-over effects and supply chain linkages. The continued operation of the smelter and further downstream investment on-site would provide a critical manufacturing anchor in
Lochaber, with opportunities for further related development in the local and national economy. Intervention in this case was also consistent with the Government’s low-carbon
economy ambitions, for example: (i) the aluminium produced at Fort William is derived from renewable energy; (ii) the aluminium produced can be used in downstream manufacturing where it often displaces other metals with higher carbon intensities, this is particularly so in the automotive sector; and (iii) aluminium is a
nationally strategic metal and a form of stored energy as the metal can be constantly recycled (using only 5% of the power required to smelt it). The Fort William smelter produces amongst the greenest aluminium in the world – emitting up to five times less CO2 than that produced by coal-fired stations, which forms the majority of the
world’s aluminium supply. Guarantee
The guarantee agreed with the GFG Alliance involve the Government standing
behind the power purchase obligations of the aluminium smelter at Fort William in the event that the smelter’s expected new owner, Liberty House Group, could not pay for the power the smelter is contracted to take from the Fort William hydro power station
A PPA with quarterly payments over 25 years would be agreed between the Lochaber smelter and the neighbouring Fort William hydro station to fix electricity prices against [REDACTED] Annual PPA payments under the guarantee – which
from the outset would include [REDACTED] – would range from between £14 million in year one (2017) and £32.3 million in year 25 (2041), cumulatively [REDACTED] The purpose of the power purchase agreement and guarantee is:
a) to ensure long-term predictable energy costs for the smelter (via a 25-year contract for renewable power); b) to provide revenue certainty to the hydro asset owner; c) to reduce the risk of stranded power arising from early closure of the smelter;
and d) to underpin a strong funding package to help retain the integrity of the Lochaber complex
By standing behind the smelter’s payment obligations in this way the Government guarantee would also enable the GFG Alliance to raise finance [REDACTED], facilitating new investment to [REDACTED] and to fund the planned downstream manufacturing plant (circa £70 million) to create new industrial employment
opportunities.
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The Finance and Constitution Committee approved the Government’s offer of support in the form of a guarantee of the smelter’s power purchases on the 22 November 2016. Return for Government support (Guarantee)
The plans of the GFG Alliance for Lochaber are focused on operating the smelter and building a new complementary on-site alloy wheels factory to serve the UK
automotive sector. The Government commissioned EY to consider the proposal and assess the benefits for the wider economy. When fully operational the integrated facility (smelter and new alloy wheels factory) is expected to:
Create an additional 290 FTE jobs on site and a further 319 indirect and
induced jobs – in total the wheels factory will create 609 additional job
Generate additional GVA of [REDACTED] per annum, and
During the two-year construction phase, create 350 direct jobs per annum
with an associated GVA of [REDACTED] per annum.
According to EY’s estimates, compared with a realistic counterfactual [REDACTED], the plans of Liberty / SIMEC create additional net GVA of [REDACTED] at net
present value. Risk Mitigation
Appropriate measures have been taken to protect and minimise the exposure of
Scottish Ministers. We have undertaken substantial due diligence around the guarantee and appropriate measures to protect and minimise the exposure of public funds . The securities (value [REDACTED]) and conditions attached to the guarantee decrease the Government’s net financial exposure, particularly in the earlier years before [REDACTED]. The strength of this package is factored into the guarantee
premium to be paid by the GFG Alliance ([REDACTED]to be paid over 25 years priced at market rates). The proposed guarantee shall be subject to Scots law and to the jurisdiction of Scottish courts.
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ANNEX D LETTER OF UNDERTAKING
Mr Fergus Ewing Cabinet Secretary for the Rural Economy and Connectivity 22nd November 2016
Dear Fergus, Commitment of the GFG Alliance to Lochaber
Thank you for your letter of 22 November. I am copying this to the First Minister. We are seeking to conclude negotiations with Rio Tinto Alcan to purchase the Lochaber aluminium smelter and hydro power stations at Fort William and Kinlochleven.
We are grateful for the support of the Scottish Government for our acquisition and investment strategy. We share your aspirations for a strong economy and industrial strategy for Scotland, and consider that the Lochaber complex can be an important part of that. Our plans involve the continuation of smelter operations for the long
term; this will secure an estimated 150 direct jobs and many hundreds more indirect jobs in Lochaber and beyond. We made a commitment to re-opening the steel plants at Dalzell and Clydebridge and are proud to have delivered on this. Our broader ambitions for investment in
Scotland are strong and, subject to the successful conclusion of negotiations with Rio Tinto, we make the following firm commitments to you: Government guarantee
To provide assurance that a government guarantee strikes the right balance of benefits against risks, the companies in the GFG Alliance will offer a comprehensive security package over the Lochaber assets and a range of other risk mitigants, conditions and guarantees to protect the Government’s
long-term interests.
The proposed guarantees shall be subject to Scots law and to the jurisdiction of Scottish courts.
We will exercise our best endeavours to procure grid connection upgrades at the earliest possible date and to make our investment in Lochaber a success.
Industrial development in Lochaber
We will make substantial additional investment in the businesses which we are acquiring and in new downstream manufacturing facilities at Lochaber for aluminium products to end-users in the automotive industry and other sectors.
This will move the smelter operation from a commodity business to the top of the value chain.
To illustrate progress we will complete and share with you a full business plan for the alloy wheels plant before July next year and seek planning consent for
the new plant within the same timescale.
We will make demonstrable investment of not less than £70 million of our own funds at Fort William to establish the downstream manufacturing facilities
within 18 months of the grant of planning consent. This investment will create
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several hundred additional direct and indirect jobs as we move towards full capacity and also protect the existing jobs.
Wider industrial development
In addition to our planned investments in Lochaber, Liberty House will invest in new Electric Arc Furnace facilities in Scotland for the recycling of steel as part of GFG’s GREENSTEEL and GREENMETAL approach.
We are already in discussions with partners to explore the development of a new Electric Arc Furnace (EAF) linked with North Sea decommissioning work. More work is required on supply sources, logistics and funding but our
commitment to you is that the GFG Alliance fully intends to invest in an additional EAF in Scotland.
Community engagement and buy-out aspirations
We appreciate that community ownership is at the heart of Scottish Government’s community empowerment agenda and commit to working with the Scottish Government, Highlands & Island Enterprise, the East Lochaber and Laggan Community Trust (ELLCT) and other stakeholders to maximise
the land asset for the long-term sustainable development of the community.
We commit to engage positively with all relevant communities and tenants in the development of the estate lands; and to work with the ELLCT and other
community ownership trusts to enter into community land transactions in relation to significant portions thereof.
We understand how important the continued development of industrial activity in Lochaber is for your Government, and the employment and economic value which
go with that, and we look forward to working closely with you to deliver what is a joint ambition. We will be a good partner for your Government and can commit to sign the Scottish
Business Pledge and be one of Scotland’s best businesses. Yours sincerely, Sanjeev Gupta
Executive Chairman, Liberty House Group Pte Ltd
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ANNEX E East Lochaber and Laggan Community Trust (ELLCT)
East Lochaber and Laggan Community Trust (ELLCT) was established as a community-led
response to the announcement of Rio Tinto’s strategic review. The potential loss of production at
Rio Tinto Alcan and uncertainty regarding future land management would impact most directly on those communities in close proximity to Rio Tinto’s land holdings. Community representatives considered it essential that their concerns were represented and that they were able to participate in future development plans
regarding the company’s assets. ELLCT was incorporated in April 2016 to facilitate the future involvement of the community which extends to the community council areas of Laggan; Spean Bridge, Roy Bridge and Achnacarry; Inverlochy and Torlundy; Caol; Kilmallie; Fort William; Nether Lochaber and Kinlochleven.
ELLCT conducted a number of well-attended public meetings across the affected area and secured the support of over 1,000 members from a population of approximately 11,000 adults. The Land Assets
The land asset is extensive and comprises four separate estates extending to 115,000 acres. It includes over 50 properties ranging from bothies to Victorian
shooting lodges, three in-hand farms, forestry interests, stalking and grouse shooting and lease income from Aonach Mor Ski Resort, Ben Nevis Industrial Estate and Ben Nevis Inn, a small-scale hydro and quarry income.
Community Aspirations
ELLCT aims to own and maximise the land asset for the long-term sustainable development of the community. From an initial financial analysis, based on the estate’s management accounts, they conclude that the land asset is a profitable
going concern and is under-utilised at present. ELLCT’s financial projections indicate an operating surplus of [REDACTED]/annum. This is dependent on lease income from hydro of [REDACTED]/annum. Under the terms of its original proposal and in the short-term (up to 3-5yrs) ELLCT would continue with existing estate
management activities but would look to manage this directly rather than retaining the managing agents. In the longer term, ELLCT would look to further a number of development opportunities to sustain the organisation and deliver added social and economic impacts. New development opportunities would be delivered directly by
the Trust or in partnership with others. We have been told by HIE that these are still being worked up but include housing outdoor sports and activities, property, land use and business. Support Provided
HIE and Scottish Government (Community Land Team) have both provided extensive support to ELLCT. HIE has provided case officer advice and financial support to the value of [REDACTED] to provide start-up costs and the
commissioning of legal and accountancy professionals to support due diligence pertaining to their buyout aspirations. Scottish Government’s Community Land Team have provided detailed advice and guidance regarding a possible community
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right to buy application over the land asset. ELLCT worked up an application to the Scottish Land Fund for [REDACTED]. This would have required Cabinet Secretary approval and Ms Cunningham was aware of the situation. Given the current
situation work on the community proposals has temporarily been put on hold. A refreshed application will need to be made to the Land Fund in due course. ELLCT had been hopeful of securing [REDACTED] in loan finance, which allowing for costs and in addition to the Land Fund award, would have represented a maximum
possible offer of [REDACTED] for the land assets. Extent and significance of Lochaber estate holding in relation to Scottish Government policy aspirations:
Community ownership is at the heart of Scottish Government’s community empowerment agenda. The acquisition and management of land can make a major contribution towards creating stronger, more resilient and more independent communities. The Scottish Government has an important role in supporting
communities who have the ambition to take on ownership of land. Landownership is increasingly seen as an enabling tool by many communities, with the ability to achieve wide-ranging benefits and contribute to the continuing resilience of Scotland’s communities.
In 2013, the former First Minister announced a target of having one million acres of land in Scotland in community ownership by 2020. Both the Community Empowerment Act (Scotland) 2015 and Land Reform Act (Scotland) 2016 created
additional opportunities for communities to own assets and the Scottish Land Fund (2016-2020) has been enhanced – it now extends to urban and rural land in Scotland and has an increased budget of £10m for 2016/17.
There is currently around 540,000 acres of land in community ownership. The addition of a further 115,000 acres would contribute significantly to this target. To put this in context, this is almost 1.5 times the total area of land brought into community ownership through the Scottish Land Fund over the four years from
2012-16; (an investment of £9.8m to support 52 acquisitions extending to a total of 83,829 acres of land). At a local level, community ownership will result in more empowered,
enterprising and resilient communities, capable of making a greater contribution to community wellbeing, economic growth and local services and amenities.
Ministers have secured the undertaking from the GFG Alliance to engage with the community about a community land transaction.
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Supporting Document 6 – 19 December 2016 official handover of Lochaber smelter
Rt Hon Nicola Sturgeon MSP
First Minister
Official Handover of Lochaber Smelter
Monday 19 December 2016
Maximum length: 5 minutes
Bullet points
You and Mr Ewing are attending the ceremony to mark the handover of the Lochaber Smelter and Power Stations to the GFG Alliance.
You will deliver your remarks in a marquee erected on the site. The audience will be made up of plant employees and local VIPs. There will be a lectern and a fixed microphone.
Jay Hambro, Chief Investment Officer of the GFG Alliance will speak first, and introduce you. Following your remarks, Mr Gupta will speak and introduce the Ganesh ceremony.
[REDACTED], I’ve included explicit reference to GFG’s commitment to engage with the local community over a community land transaction for the complex’s land assets (around 115,000 acres).
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Thank you Jay [Hambro].
Delighted to be with you all to mark handover of Lochaber Aluminium
Smelter and Power Stations to Liberty.
Know that for so many people in local area – whose lives and
livelihoods depend on this business – uncertainty has made past year
feel like a lifetime.
Scottish Government Action
Over that period, Scottish Government and HIE have done everything
possible to ensure future of this complex.
Because we are fully committed to securing a vibrant and sustainable
manufacturing industry in Scotland
And this complex has exactly strengths we want to promote:
o a highly skilled, dedicated workforce
o ability to compete in low carbon economy – smelter mong most
environmentally friendly in the world.
Delighted we’ve helped secure long-term future of smelter and power
plants.
Real vote of confidence in all workers here that GFG Alliance
recognises potential.
Complex Future
And of course GFG’s ambitious and far-sighted approach will really
benefit local community.
Estimated that Liberty’s plans for an alloy wheels factory will create:
o 350 direct jobs during its 2-year construction
o an additional 290 FTE jobs on site, when it is finished
o a further 319 jobs in Lochaber and wider area as a result.
Particularly pleased that GFG have agreed to engage with community
over a community land transaction.
Because we know community ownership can help create stronger,
more resilient and more independent communities.
Fact that East Lochaber and Laggan Community Trust now has 1000
members – shows how prospect of ownership can galvanize
communities.
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Conclusion
It’s a further demonstration that this deal is great news – not just for
current and future employees, but also for local community as a
whole.
That’s why Fergus and I are so pleased to be here to celebrate it with
you.
And I wish you every success for the future.
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Supporting Document 7 – 19 December 2016 official handover of Lochaber smelter
Ministerial QA GFG Alliance Official Handover of the Lochaber Aluminium Smelter and Power Stations - 19 December 2016
Guarantee Q - What is the exposure of Scottish Ministers under the Guarantee?
A - The guarantee covers the quarterly payment obligations owed to Lochaber Hydro
by the smelter for a 25 year period. Consequently, if the guarantee were to be called it would be honoured in quarterly instalments.
Therefore the liability of Scottish Ministers would at no point exceed a quarterly payment. Recovery of this figure would be pursued through the parent company guarantees obtained and the significant securities package that we have in place.
Q - What due diligence has been competed for the guarantee and what appropriate measures have been taken to protect and minimise the exposure of public funds.
A - The securities and conditions attached to the guarantee substantially decrease
the Government’s net financial exposure.
The benefit of the guarantee has been priced at market rates and the GFG Alliance will pay the Government a total of [REDACTED] over the lifetime of the guarantee. Q - How will the guarantee affect the Scottish Budget?
A - In terms of the budgeting, Her Majesty’s Treasury consolidated budgeting
guidance requires that we recognise the issue of financial guarantees in our Annually Managed Expenditure (AME) Budget at fair value.
Any subsequent calls on the guarantee will impact on SG’s Capital DEL budget. Q - If we are giving a guarantee is that not a State aid?
A - This transaction has been completed in accordance with the market economy
investment principle (MEIP). At its most basic, the test for MEIP is whether in similar circumstances a private investor, having regard to the foreseeability of obtaining a
return and leaving aside all social, regional-policy conceptual considerations would have subscribed the capital in question. The test for MEIP is therefore an economic one and not a legal one. Our
commercial/legal advisors have confirmed that the test has been met and there is no State aid present.
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Estate Land/Community Trust Q - This land is iconic. What are GFG’s intentions for it?
A - The acquirer has provided an undertaking (in terms wholly acceptable to SG) to
enter into a community land transaction and to engage with the Community in the development of estate lands. Q – We understand that the purchaser has given an “undertaking to enter into a community land transaction” – what would that entail and would it involve the community trust that has been set up? What would be the scope of such a
transaction?
A - It will be for the purchaser and community representatives to consider the details
of any transaction.
I understand that the East Lochaber and Laggan Trust has already worked up a number of proposals on behalf of the community with support from Highlands and Islands Enterprise but, as these were part of a confidential bidding process, the
exact details are not in the public domain. If the community plans to acquire land are to be taken forward (by the Trust or others) on a sustainable basis it will be important for any transfer of land and assets
to provide the community with some form of income which would help secure the long-term sustainable development of the community Q – What has the Trust done?
A - The Trust held a series of community meetings over the Summer and has since
been gaining information, undertaking financial analysis, working with potential funders, Government, agencies and others to prepare for a future community – led
buyout. We understand that the Trust will hold another round of meetings early in the New Year as part of the process of developing further proposals. Q – What support has the Government provided to the community?
A - Highlands and Islands Enterprise and the Scottish Government have provided
extensive support to the Trust. HIE has provided case officer advice and financial support towards start-up costs and professional support to develop buy-out
proposals. The Government’s Community Land Team have provided detailed advice and guidance about putting together a possible future right to buy application. This support will continue.
Q – What about financial support?
A - The Government has increased the size of the Scottish Land Fund to £10 million
per year to support communities in developing the capacity to bid for land and to
acquire the land itself. It would be open to the Trust to seek financial support from the Land Fund for any future bid for community ownership of the land in question.