The owner of the UK's largest electric steelworks has proposed that the government should seek a single buyer for British Steel and Speciality Steel UK (SSUK), a move that would create the country's biggest steelmaker. Sev.en Global Investments, owned by Czech billionaire Pavel Tykač, has not only pledged to invest £100 million in the UK, primarily at the electric arc steelworks in Cardiff acquired last year, but also possesses the capacity to invest "hundreds of millions of pounds" more under its 7 Steel brand.
Government Control and Potential Acquisition
The government took control of British Steel in April last year due to concerns that its Chinese owners were about to shut down the business. Four months later, the official receiver took control of SSUK from Liberty Steel after it was declared "hopelessly insolvent." Alan Svoboda, Sev.en's chief executive, stated that while he could not discuss specific talks, a combination of the two businesses might be a more attractive solution requiring less taxpayer support. He emphasised that Sev.en has a long-term view and could be a solid partner to achieve ambitious goals.
Investment Plans and Industry Expertise
Svoboda highlighted the potential for further investment in steel processing to produce more profitable goods. He noted that job cuts would not be necessary as workers could transition to downstream operations. Any bid would require the government to abandon exclusive talks to sell SSUK to Blastr, a Norwegian startup, and reach a deal with British Steel's Chinese owner, Jingye, for compensation. However, the prospect may appeal to government officials who have previously expressed hopes for a combination.
Sev.en's £100m Investment and Hydrogen Furnace
Sev.en's planned £100 million investment in Cardiff and other UK sites bought from the Spanish group Celsa could include a new furnace using hydrogen to melt steel. Svoboda called for a more thorough debate on the future of British Steel and SSUK, stating that the company is still in growth mode and has capital to deploy. He attributed part of the investment plans to the UK government's decision to impose 50% protectionist tariffs on global steel imports above set quotas, which gives UK steelmakers an advantage in the home market.
Market Outlook and Competitive Landscape
Svoboda acknowledged that the steel industry is not yet out of the bottom of the cycle but expressed strong belief in the UK steel industry's long-term prospects. SSUK's electric arc furnaces are seen as attractive assets that were starved of operating cash, while British Steel will require significant government subsidies to upgrade to electric arc furnaces for lower-emissions steel. If Sev.en succeeds in its bid, it could overtake Tata Steel as the largest steelmaker in the country, making Pavel Tykač a key player in UK industry. Tata is currently building an electric arc furnace at Port Talbot with £500 million in state support.
Pavel Tykač and Sev.en's Strategy
Tykač, whose fortune is estimated at $8.9 billion by Forbes, started as a computer distributor in the early 1990s before acquiring coal power stations in the Czech Republic to form the Sev.en energy group. Svoboda, a former McKinsey consultant, revealed that Sev.en Global Investments owns assets worth $3 billion. The company has acquired fossil fuel assets, including coalmines in the US, Australia, and Vietnam, as well as four gas-fired power plants in the UK under the InterGen brand. Sev.en has described its strategy as a "contrarian approach," betting that the transition away from polluting fossil fuels will be slower than expected.
