GFG Alliances Dunkirk Aluminium Plant Less Exposed to Crisis
Reuters, citing sources with direct knowledge of the agreement, reported that Mr Sanjeev Gupta’s GFG Alliance secured a loan from Trafigura in 2018 by agreeing a six year deal to sell aluminium to the commodity trader at a discount to market prices and that the loan was used to help finance the December 2018 purchase of Europe’s largest aluminium smelter at Dunkirk in France by GFG’s Liberty House. The deal to sell aluminium to Trafigura at a discount, signed in November 2018, according to a copy of the contract seen by Reuters, gave an incentive to take part in financing Dunkirk as it provided the commodity trader with extra income on top of the interest earned from the loan. Sources said “The agreement suggests that the Dunkirk plant is less exposed to wider financing problems faced by GFG Alliance because, unlike other parts of the conglomerate, it had funding other than from Greensill Capital, which filed for insolvency last week.
Sources said “A consortium which included banks lent a total of USD 350 million to GFG to buy the Dunkirk smelter and Trafigura committed USD 150 million of this for a USD 20 a tonne discount. Mr Gupta contributed USD 500 million towards remainder of price for the Dunkirk smelter.”
A third source close to the matter said that the Dunkirk plant, whose aluminium output is crucial for continental Europe’s auto, aerospace and packaging industries, generates cash and is not reliant on Greensill for finance.