[ferro-alloys.com]Liberty Steel Group, part of the GFG Alliance, has been named preferred buyer for Bayou Steel Group, the US producer of structural steel and merchant bar which ceased operation and entered administration at the end of September 2019, Liberty said in a statement Tuesday. Liberty's bid was selected by a bankruptcy court in Delaware, it said

Subject to completion of a $28 million deal to acquire the business, Liberty has developed a plan to upgrade and modernize Bayou's idled steel mill in LaPlace, Louisiana, with a view to restarting its recycling operations in the second half of 2020 and steelmaking operations by 2021. The transaction is expected to close on January 31, 2020, and no approvals from other authorities are required for its completion, a Liberty spokesman said.

Bayou adds scale to Liberty's US steel business, currently with a capacity of some 2 million mt/year, including existing operations in Illinois, Ohio, New Mexico and South Carolina. The group's so-called GREENSTEEL strategy focuses on renewable sources of energy and recycled materials, with a view to moving toward carbon-neutral steel production by 2030.

Potentially, Liberty could install a new electric arc furnace at Bayou, although it may work to upgrade the existing one, the spokesman said.

Sanjeev Gupta, Executive Chairman of GFG Alliance, said that while the Bayou plant requires upgrades to be restarted competitively, "we see good potential for the business. Bayou benefits from reliable access to supplies of recycled steel, competitive power prices and its own deepwater port."

Bayou Steel was founded in 2016 but the history and operation of steelmaking at its LaPlace facility go back to 1979. It includes a recycling business which feeds an electric arc furnace with downstream rolling operations capable of producing long products for construction and infrastructure. The business distributes products throughout the US, Canada and Mexico via barge, rail and truck.

The plant has been idled since September 2019 and requires investment before steelmaking operations can begin again, Liberty said.

The shutdowns at Bayou's LaPlace and Harriman, Tennessee, works took out about 275,000 st/year of capacity from the US long products market, S&P Global Platts reported at the time.

LIBERTY TARGETS 5 MILLION MT/YEAR US OUTPUT

Grant Quasha, GFG Alliance's Chief Investment Officer for North America, said: "We put together a compelling bid to save the business and we see an excellent fit in terms of our group values, our existing operations in the USA and the wider ambitions of the Liberty Steel Group globally. Our immediate focus will be on restoring the steel recycling supply chain and operations at the facility. Once fully upgraded and operational the business will bring our total production capacity in the US to 3 million tons per annum, moving us closer to our target of an aggregate 5 million tons of steel production in the US."

A Liberty spokesman said he could not yet give a specific timetable for the targeted US expansions to 3 million mt/year and 5 million mt/year due to the amount of modernization required at Bayou.

In October, Liberty Steel USA announced plans to invest up to $25 million to install a new electric arc furnace at its Georgetown, South Carolina, wire rod mill and to improve the infrastructure of its melt shop. The investment is expected to boost the output at the previously shuttered mill, which Liberty purchased from ArcelorMittal in December 2017 and reopened last year, the company said. Liberty aims to increase rod output from the site to over 400,000 st/year, it said.

Liberty cannot yet reveal what other assets it may be eyeing in the US steel sector, the spokesman said Tuesday.

(S&P Global Platts)

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