£30m rescue for steel company Celsa as 'Project Birch' kicks off

Steel company Celsa has been granted an emergency loan by the Government in what is believed to be the first deal under the “Project Birch” programme to support strategically important businesses.

Celsa, which has 1,600 staff in the UK and is the country’s biggest manufacturer of steel rebar used to reinforce concrete used in construction, has received a £30m bailout.

It is understood that while the funding comes as a loan, its terms could see the taxpayer take an equity stake in the business if it is not paid back, although the Government said it “expected to be repaid in full”.

Details of the rescue were not revealed, but the Government said it included commitments relating to protecting jobs, environmental targets, and “restraints” on executive pay.

Existing lenders and shareholders also had to put in extra funding. Rescuing Celsa, which is part of a Spanish business, could fire the starting gun on other bailouts under Project Birch, with Jaguar Land Rover and Tata Steel also seeking similar support from the taxpayer.

The Business Department said the Celsa agreement was made in “exceptional circumstances”, adding there was a “high bar for putting taxpayers’ money at risk in this way” and came as “an absolute last resort”.

It added that to be eligible for such support, a company’s “failure or financial distress could cause disproportionate harm to the UK economy or society”.

Luis Sanz, chief executive of Celsa UK, added: “We are a proud UK business, and take our responsibilities to the communities in which we work and the environments in which we live very seriously.”

Celsa produces about 1.2m tonnes of steel in the UK annually. At the height of the pandemic demand for its products collapsed as construction sites shut down, but is now understood to be at about 75pc of normal levels.