Liberty House and SIMEC, two members of the energy, metals and industrial group the GFG Alliance, have reached an agreement to acquire Rio Tinto’s hydro power and aluminum smelting operations at Lochaber near Fort William in Scotland. The total consideration of the transaction is £330 million (US$409 million), which is being funded with a mixture of equity and funds raised through securitization program. The deal was first announced in late November.
Liberty House is an international business, specializing in metals trading as well as the manufacture and distribution of steel and advanced engineering products.
SIMEC, GFG’s energy business, will own and operate the hydro plants, while Liberty House Group will own and develop the aluminium business by integrating the smelters with the group’s downstream engineering and manufacturing activity in Scotland and beyond.
During a visit by Scotland’s First Minister Nicola Sturgeon and Rural Economy Secretary Fergus Ewing to celebrate the Scottish Government-backed sale, the new owners announced plans to invest an additional £120 million (US$149 million) to upgrade equipment and establish an aluminium wheel manufacturing facility at the site.
The Scottish Government is supporting the acquisition and its investment program by guaranteeing the power purchases of the aluminium smelter for the next 25 years.
Sanjeev Gupta, executive chairman of Liberty House Group and a member of GFG Alliance’s strategic board, says, “We hope this day will come to be recognized as the start of a bright new future for Highland industry. It puts Lochaber right at the heart of our vision for sustainable and integrated local production that can revitalize British manufacturing. The Scottish Government has recognized the immense opportunity this investment brings. Their support has been refreshing and inspiring.”
Jay Hambro, GFG’s chief investment officer and CEO of SIMEC Energy & Mining Divisions, says, “I am delighted that SIMEC’s portfolio of renewable energy assets continues to expand with a determined and focused investment strategy. These hydro-power stations have enough capacity to power around 83,000 homes.
“Today, Lochaber provides the power required to produce 47,000 tonnes of aluminium. We have already identified investment programs to significantly increase power generation from the existing assets and are studying how to create further capacity locally.”