[ferro-alloys.com]The UK government confirmed July 2 it had provided an emergency loan to steelmaker Celsa Steel (UK) Ltd. to allow the company to continue trading amid difficult market conditions caused by the coronavirus pandemic.

"The agreement will safeguard a key supplier to the UK construction industry and secures more than 1,000 jobs, including more than 800 positions at the company's main sites in South Wales," the Department of Business, Energy and Industrial Strategy (BEIS) said in a statement.

A report in the Financial Times estimated the loan package to Celsa Steel (UK) at GBP30 million ($37.39 million), but BEIS said it could not immediately confirm the amount.

Celsa Steel (UK) operates an electric arc furnace in Cardiff, Wales and is the largest UK manufacturer of reinforcing steel with an annual long products capacity of 1.2 million mt.

UK steelmakers have been hard hit by the pandemic which caused a substantial drop in demand in their two main consuming sectors, construction and automotive, which continue to be overshadowed by concerns over future investments and costs in the current absence of a Brexit trade deal.

Celsa was not immediately available for comment July 2.

As part of the loan, which is expected to be repaid in full, the company must meet a series of legally binding conditions, which the government has negotiated to ensure the loan benefits the workforce, business and wider society, BEIS said.

"This will ensure public money is used to aid wider government policies to further benefit the UK. These conditions include commitments to protect jobs, climate change and net-zero targets, improved corporate governance, such as restraints on executive pay and bonuses, and tax obligations. It has also required further financial commitments from shareholders and existing lenders," it said.

The government said it has brought together the firm's management, shareholders and other lenders to create a strong package of support for the company, its workers and UK economy. "This is a good deal for all parties," it said.

Tata Steel

The government is also understood to be close to announcing a support package for Tata Steel Europe, which operates a blast furnace at Port Talbot, Wales, and is the UK's largest steelmaker. Tata, which has around 8,000 employees in the UK, is reported to have asked the UK government for a GBP500 million loan. A BEIS spokesman could not confirm July 2 if Tata was among a number of companies receiving loans.

British Steel — recently purchased by China's Jingye Steel Group — and Liberty Steel Group are also understood to have applied for UK government support. According to S&P Global Platts calculations, so far, cumulative loan requests to the UK government from steel producers are approaching GBP1 billion.

The support scheme under which the steelmakers have applied for help as companies of strategic importance is dubbed Project Birch.

In March, the government established a broad package of support schemes for companies of all sizes across sectors, to protect businesses and livelihoods during the pandemic.

Through its Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme and the Bounce Back Loan Scheme, more than 1 million loans have been approved – while 9.3 million jobs have been protected through the Coronavirus Job Retention Scheme, BEIS said.

"In exceptional circumstances, where a company is of strategic importance and all other options have been exhausted, the government may consider providing bespoke support," it said.

More broadly in support of the UK's steel industry, the government has provided more than GBP300 million in electricity cost relief since 2013, public procurement guidelines with annual reports on the proportion of public sector steel bought from British firms and details of a steel pipeline on national infrastructure projects worth around GBP500 million over the next decade, BEIS said.

(S&P Global Platts)

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