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In this edition, Sanjeev discusses GFG’s response to the conflict in Ukraine. Plus, he talks about a new organisational structure for GFG and the highlights of his trip to Australia.
Also, we’re joined by Marian Elliot, Global Head of Risk and Sustainability. And we have a question for Sanjeev from a colleague in Poland. 19 mins
Show Transcript:
| TIMESTAMP | SPEAKER | DIALOGUE |
| 00:00:01:09 | Spoken from GFG Alliance | |
| 00:00:03:22 | CHLOE | Hello and welcome to Spoken, the podcast for GFG Alliance colleagues across the world. I’m Chloe Tilley, and this time we’ll be meeting Marian Elliot, Global Head of Risk and Sustainability. And of course, we’re joined by Sanjeev Gupta, Executive Chairman of GFG Alliance. Hi, Sanjeev, how are you? |
| 00:00:19:12 | SANJEEV | Hello, Chloe. I’m okay, I hope you are well too. |
| 00:00:22:17 | CHLOE | Absolutely, I am thank you Sanjeev. Now you’ve been in Australia recently and we’ll talk about your visit later. But first the war in Ukraine has understandably caused grave concern across the world. How is the business responding to help those affected by the conflict? |
| 00:00:36:24 | SANJEEV | Yes, I mean it’s difficult to imagine that these atrocities are going on now. We are all shocked and dismayed by the terror and cruelty which we watch every day on television. One would have thought these things were confined to history books. I do hope a resolution can be found soon, and this devastation stops. But, in the meantime, one thing I would say is that we are proud in terms of how our people, especially in what I call the frontier countries and from Geo plants that we have shown their heartfelt generosity offering solutions as best as they can, whether its donations and accommodation but also, actually more importantly, job opportunities and career opportunities. So, in Poland, in Czech and Romania, there has been a lot of generosity shown and I am very grateful to my people for that. |
| 00:01:30:12 | CHLOE | And tell me a little bit about what steps are being taken to manage any potential impact of the conflict in Ukraine on the business. |
| 00:01:36:19 | SANJEEV | So, Chloe, firstly, you see what is happening in Ukraine itself shows what a closely knit family can do when they are faced with adversity, by working together and looking at problems and finding new solutions for them. So, similarly, I think for us this has been quite an ordeal because Ukraine is a large country – it’s forty million people, it’s the largest land mass in terms of any European nation but it’s also a critical supplier of raw materials. Of course, such things such as grain, which is already having an impact across Europe, but for us they are major supplier for raw materials such as iron ore for our plants. And since we have the frontier plants next to Ukraine – so Romania is only a couple of hours away by road, Poland is bordering, Czech Republic’s not far – there is a lot of dependence on supply chains from Ukraine and Russia. They have been partners forever and they will be, I hope, for times to come. But what we have had to do is to diversify our supply chain. So, when the war broke out, I flew immediately myself to Romania and to Czech in particular and we looked at our supply chains, our dependence, our risks. And at that point, the supply chains were very severely disrupted. So we actually even put in place emergency measures in case we could not solve those supply chain issues. We have diversified our supply chain enormously, so we have now raw materials coming from all over the world. There’s been a lot of work which is basically confronted this issue head on and has found solutions and we’re producing now full, again we’re back to record productions, we’re actually testing out how we can increase our production even further given the market conditions. So what has happened, the adversity we have gone through has made our business better, more robust and fitter for the future with less risk. |
| 00:03:22:07 | CHLOE | And let’s talk more broadly. What’s the latest news on how GFG’s businesses are performing at the moment? |
| 00:03:27:17 | SANJEEV | Now, look, we go from strength to strength. If you look at our production records, we’re beating records everywhere and sometimes beating historic records. So, that’s really evidence of all the turnaround efforts the teams made and what is now yielding results. As examples, Whyalla’s production is up 17 percent year on year, and InfraBuild in Australia had more or less doubled its profit in the last half of the year. Mining businesses obviously doing incredibly well with the strong markets but also hitting records on volumes. Liberty Bell Bay, which we acquired year and a half ago is already up in production by 18 percent and therefore the plans for expansion of capacity there. And our main plants in Europe, I mean, Galati, Ostrava, they have, again, record production in many aspects. We released some figures on this in the last few days. I mean, one particularly stands out for me is that our main blast furnace blast numbers, five in Galati, is now producing more liquid metal than it’s ever produced since it was built. So, I mean, this is an incredible statistic in itself |
| 00:04:31:17 | CHLOE | And there’s news from other parts of the business that are not doing so well. What can you tell us about that? |
| 00:04:34:22 | SANJEEV | As always, it’s not plain sailing. Despite these good market conditions, we have some spots, some businesses which continue to need effort and turnaround and capital. So, I think the two examples really to talk about – one is the UK, which continues to be a challenge for the group. There is a lot of money which has gone into the UK and continues to go into the UK. A lot of effort is being made for restructuring and reform. You get more adversely impacted by energy markets than even our other operations in other countries. So this is quite difficult because our plants in the UK are very energy intensive. We have electric furnaces and mills. So, our mills are okay, but the furnaces are struggling, because it’s not really viable at the moment to melt scrap. So we’re doing it very selectively. But our commitment remains that we will solve our UK plants or our UK operations difficulties. We’ve had some recent small wins, like solving our disputes with HMRC. New capital is continuously gone into the UK and will continue to go in the UK and we’re committed to making that operation work. In Belgium it’s really a little bit tragic because that operation actually is well poised for success. It went through a restructuring effort successfully and it’s being implemented. The court has awarded what I call technical insolvency for the plant, because under Belgium GAAP, they don’t value our fixed assets and hence if you do the accounts without the fixed assets you will be in negative equity. So it’s technically insolvent and the court has ordered that administrators be appointed for that. But the plant is a good business. The negative equity is being rectified even on a technical Belgium GAAP basis. New capital is being provided as well and there is a lot of attention now, including my own personal attention to the supply chains and to making sure that we rectify this unfortunate plight. The plant is suffering. I’m in touch myself with the liquidators themselves and we are all cooperating to see this happen, to see the technical insolvency is secured, to see new capital being put in and to then get this matter overturned in an appeal in the Belgian courts. So, I’m confident we will get through and we are by far the best option for the plant. We have done a lot of work, a lot of money has been spent, as I said all the time, and there is there is absolute commitment to make this operation successful in the future. |
| 00:07:02:22 | CHLOE | And Sanjeev, what can you tell us about GFG’s refinancing process. |
| 00:07:07:04 | SANJEEV | Now Chloe, obviously, this is by and far the most important job I have at the moment. Most of my day goes basically on sorting this out. There’s a huge, huge amount of work, which of course, we’ve got a lot of people who are helping me hold the senior management teams who are helping me do this undertaking. We have had some early successes, like the refinancing of our LPMA business in Australia. We have also provided obviously, as I was saying earlier, capital of the UK. And now, what is extremely welcome recent news, is the refinancing of our U.S. Steel ABL, which is real evidence of the market believing in our business, believing in our brand, and, I mean, this is one important step, but many more to come. And so I would say just watch the space, things are evolving very quickly and more good news, of course, hopefully soon. |
| 00:07:56:22 | CHLOE | Now we understand there’s to be a new organisational structure for GFG in terms of leadership and how functions will collaborate. Just tell us a little bit about what these changes will involve. |
| 00:08:06:17 | SANJEEV | The evolution of our organisation in terms of how we operate, how we govern, how we report, is critical to the future of this business. It was before the collapse of Greensill, an effort which was already underway, but now it has become imperative. So this new org structure, which has been evolved, is quite a big step in that direction. We’ve sort of created our own formula, so to speak. And this basically sees sort of a three pronged approach to managing and governing our business. So first we will, of course, have our CEOs who are tasked with creating value, to turning our businesses, achieving all the goals which are set to them. So I call them the creators in terms of value. Then we have our global functions, which are getting more centralised, more organised and the way as a head office is really now starting to come up into its own. The job of these functional leaders is to enable business, to enable the CEOs, enable the organisation to really fulfil their objectives and also sometimes to manage control and report in terms of how everything is working. So it’s a balancing act. And then this new role of the president is very important, because this basically, their job is to protect value, to protect value for all stakeholders and also to protect value for the long term, rather than short term. And of course, the boards itself are evolving, adding strengths to the boards. But also we will now increase and strengthen board committees, so various board committees will be formed with their again delegations, which will be most focussed and specific on managing specific issues with committees which are housed by appropriate board members, who will be able to then apply themselves to different tasks which the board committees will undertake. |
| 00:09:47:17 | CHLOE | Also talk to us about, in other news, the fact you’ve appointed Sandip Biswas, as Group Chief Investment Officer. What will Sandip’s experience in the steel industry bring to this role? |
| 00:09:57:22 | SANJEEV | So Chloe, it’s a very good call. This is great evidence of the fact that great leaders, like Sandip, who have had decades of experience. I mean, he’s been at Tata for almost two decades and excelled in many, many, many different roles there, lately as chairman and head of Tata Steel UK, I mean, I won’t list his accomplishments. But what I will say is that I’m very proud that he has joined Liberty and GFG with full passion. His role will be really to focus on commercial excellence as we bring this group together to focus on investments, projects, finance and of course, most importantly, he will lead our CN30 objective. But good people like Sandip is what will make success happen for the group in terms of leadership. And you know, this will continue. We have more in the pipeline, which will come through soon. So I’m very happy, I am very proud with his addition. |
| 00:10:50:17 | CHLOE | Okay, well thank you for the moment Sanjeev. We’ll be back with you shortly to answer a question from a colleague and we’ll meet our guest next. |
| 00:10:56:14 | MUSIC ‘SPOKEN’ | |
| 00:11:00:07 | CHLOE | Joining us now, is Marian Elliot, Global Head of Risk and Sustainability. Hi there, Marian. Now tell us a little bit about your role. What does it involve? |
| 00:11:07:12 | MARIAN | Hi Chloe thanks for having me on. So my role is to look after risk and how we think about and manage risk across the organisation. And part of that also includes how we think about environmental, social and governance factors. |
| 00:11:22:07 | CHLOE | Well, ESG, environment, social and governance, is a term that we’re getting used to. But what does ESG mean in practice to colleagues working on site? |
| 00:11:30:14 | MARIAN | So, very simply ESG is about impact. So it’s the impact we have on people and the planet, and also the impact that people and the planet are likely to have on our businesses. So, there’s nothing more important really. Managing ESG is about securing our future as a business, but also helping to secure the future of our people and the world we live in. We look at that impact through three different lenses, E as we say, environment, what can we do to improve our impact on the planet and manage the risks that climate change poses to our businesses. Social is about people. What can we do as a business, to have a positive impact on our people and communities. And how can we anticipate and manage changing needs of our people and businesses and skill sets. And finally, governance which is about how organisations are run. So how do we make sure that we’re making good decisions, based on good data and acting as a responsible member of the business community. And I think everybody within the business, whatever their role, can contribute to one or more of those objectives. |
| 00:12:32:17 | CHLOE | And tell us what are your priorities as far as your contribution to the business is concerned through this year? |
| 00:12:37:22 | MARIAN | Ah that’s a great question Chloe. And there are lots of things going on, so I’ll try to distil them down into sort of three top priorities. On the environment front, we’re looking at mapping out, I’m sure everybody’s heard about the CN30 objective. So, how do we actually get there? What’s it going to cost, and how do we report towards that objective? On S around our people. It’s about continuing to focus on health and safety, but also, training and development. So you’ll see more and more coming through the academy and also, diversity and inclusion. So again, what can we do to improve the experience of women within the business and ensure that we have a good environment for those who are up and comers through the business. And, finally, on governance, you’ll be hearing more in the coming weeks around structure and reporting, and really embedding some of those risk management frameworks and ensuring consistency and visibility around how decisions are made. |
| 00:13:32:19 | CHLOE | And finally, on this podcast we always like to get to know our guests a little bit better. So, I understand that away from work, you’re a very keen cyclist, so share with us if you would. What’s been your, your proudest cycling achievement to date? |
| 00:13:45:12 | MARIAN | I think that has to be when we cycled from Land’s End to John O’Groats. It was quite early into my cycling career, so I really had no idea what I was signing up to. But we raised a lot of money for the Paralympics, made a lot of good friends along the way. And saw a lot of the beautiful country, which I don’t think you’d necessarily see, if you were travelling any other way. So, that’s probably the proudest moment for me. |
| 00:14:07:02 | CHLOE | Wow, that is impressive. Well, Marian, thank you so much for joining us. It’s good to speak with you. |
| 00:14:10:12 | MARIAN | Thanks Chloe. |
| 00:14:11:02 | CHLOE | Well, next is a question from you for Sanjeev. |
| 00:14:13:24 | MUSIC ‘SPOKEN’ | |
| 00:14:17:12 | CHLOE | Well, Sanjeev is still with us, so let’s get a question from you now. |
| 00:14:21:02 | AGATA | HI Sanjeev, this is Agata Filejska, from Liberty Czestochowa Poland. I am the assistant of General Director here Mr. Krishnamoorthy. We have difficulty hiring new young recruits, as no one wants to come to steel industry nowadays. And the average age of the current workforce is high, how do we solve this issue? |
| 00:14:46:04 | SANJEEV | It’s a question which is obviously one of the closest to my heart. And actually, this takes me back to the beginning of our industrial journey. You know, when we looked at almost a decade ago, when I looked at the steel industry in Europe, in the UK, and developed parts of the world, and the industry was basically going backwards, plants were closing all over the place. It was regarded as a sunset industry. So as a result of that adversity in the industry, a lack of investment. There was also then, effectively, adversity in the skills development because obviously young people want to be in a business which has a bright future, rather than something which is declining and dying and more recently, what is also polluting the world. So we’ve had a real issue bringing young people into our industry. So in 2017, I launched the GFG Foundation together with my wife Nicola, and the core purpose of the foundation literally, is to inspire young people, very young people, primary and secondary school, to get trained in commerce because it’s basically more about exposure, inspiration, teaching them what it is, letting them feel the industry steel is very easy to explain because it’s everywhere, all around us. But to see it produced to explain the processes and especially now, to show that we have new technology and new processes such as hydrogen, which will really become a part of the solution. And the second part is now, more recently, we’ve launched our GFG academies and the academies are really training grounds. This is where, you know, it’s where you really start to bring these young people into our industry. And eventually these academies will feed into our plants and there we will continue the training operation, which is another amazing thing about the steel industry, is that a job is not just job is actually training ground as well. You continue to learn and grow. In the long term, I am very positive that we will have the steel industry will once again, be at the core of aspiration for young people, in terms of a career path. |
| 00:16:42:22 | CHLOE | Well, thank you, Sanjeev, and thank you, Agata, for your question. If you would like to ask Sanjeev a question, do please send us an email with your question to Spoken@GFGAlliance.com that’s Spoken@GFGAlliance.com Now, as I mentioned earlier you’ve been in Australia recently Sanjeev. So give us a flavour of what you’ve been doing there. |
| 00:17:01:12 | SANJEEV | Yes, Australia is taking up a bulk of my time in terms of my visits. I was there a couple of weeks ago. I spent three weeks there which is, for me, a very, very, very long trip and I’m again going to go next week back again. So there is a lot going on, Australia, obviously houses some of our best businesses, some of our best performing businesses and more importantly, businesses with some of the best potential, especially when it comes to hydrogen and hydrogen steel. My last trip, we did some very important things which were long pending because of the COVID travel restrictions. We inaugurated Liberty Bell Bay and it was amazing because actually 16 months since we acquired the business and has done very well since, and I am very, very proud of their achievements. But we were not able to celebrate joining the family until now. So that was a really nice event. I met some great community leaders and political leaders who are all very supportive, so I am very encouraged by our operations in Tasmania and I will definitely make Tasmania a centre of our focus in terms of how we develop our future and our future investments where to go. As a sign of that, we also launched the GFG Foundation in Tassie, which again is incredible, because it’s again very strong community feelings, history, lack of skills development. So it’s really a great place to be undertaking that initiative for the foundation as well. Then, I moved to South Australia, where we revealed our magnetite expansion. So we got two and a half million tonnes with this equipment, which is now being installed there, which is a very important part of our overall green steel and CN30 objectives. Because the future of steel is hydrogen steel and the best place in the world to produce hydrogen steel is in Whyalla. We have huge reserves of magnetite, which we’re now exploiting. We have some amongst the best renewables in terms of wind and solar, which again, we have our Cultana solar plant, which is under construction. And as a connected part of that or as a follow on. Basically, I spoke at the American Chamber of Commerce, together with the newly appointed young premier. I talked about my commitment to hydrogen steel. The premier talked about his promise to build a hydrogen plant in Whyalla, which will hopefully feed our aspirations as well. So it was very well received. There is a lot of excitement in South Australia. In Australia, and around the world, but really, I believe that Whyalla and South Australia can be a real powerhouse, real global hub for hydrogen and hydrogen steel. |
| 00:19:26:19 | CHLOE | Well, it’s good to hear about your trip and activities there in Australia. Well, that’s it for now. Thank you very much, Sanjeev. We look forward to catching up with you again next month. |
| 00:19:34:17 | SANJEEV | Thank you Chloe. |
| 00:19:35:17 | CHLOE | Now, do join us then when we will keep you updated with the latest news and views from across the business. Until then, from me Chloe Tilley, and Sanjeev Gupta, its thanks for listening, and goodbye. |
| 00:19:45:07 | MUSIC ‘SPOKEN BACK SOON’ | |
| 00:19:49:14 | END |
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