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SSI is digging deep to ride out the recession
‘YOU need deep pockets to ride out the recession,”
reckons SSI chief Phil Dryden, who has discovered in recent months just how deep the steelmaker’s financial resources need to be.
Last week, the plant reached another major landmark as the one millionth tonne of steel rolled off the production line only five months after the blast furnace was relit amid a blaze of optimism.
Mr Dryden admits he’s had some darker moments recently as a host of external pressures, including rising costs and falling steel prices, has conspired against the business.
“We are through the worst as long as the steel world doesn’t go into meltdown,” he says.
Doom-laden rumours have been swirling around the steel industry for months. Some fear that China will flood global markets with cut-price steel, threatening the future of all but the biggest producers.
Companies have been scaling back production, and industrial powerhouses such as the US and Germany warn their output will fall as producers attempt to ride out a protracted slump in prices.
Mr Dryden continues: “There is only so much you can control.
From a production point of view we are delighted with how things have gone. The plant has performed with hardly a blip. But in the past few months I’ve been focused more and more on money matters. You find yourself juggling cash here there and everywhere.
“Right from the start we never had any breathing space to put money on the balance sheet. That has meant that we have had to draw on the owners and the banks to see us through.”
He acknowledges that the support of the firm’s suppliers has also been crucial.
In a very short space of time the company has become a key part of the North-East industrial landscape. It has spent about £275m with 1,000 different suppliers, a fair chunk of them based in this region.
“If you don’t sit down and talk to your suppliers you are at risk of them making decisions on their own. It is better to work with them and I must say they have been very supportive of us and understand where we are going.”
The Northern Echo has spoken to creditors of SSI whose patience has been stretched, but all of them expressed goodwill and their ongoing support for SSI’s project.
The steelmaker will be working on repayment plans that it hopes can satisfy all parties.
“The suppliers have been waiting for a good news story from us in terms of the financial side of things,” explains Mr Dryden.
He is confident that two upcoming developments will put the business back on a more solid footing.
The launch of a new pulverised coal injection (PCI) plant represents another massive investment by the owners and the three Thai banks that bankroll the operation.
The £35m facility that is rapidly taking shape adjacent to the Redcar blast furnace will make the plant much more efficient and help it to edge further into profit. The builders will hand it over at the end of January.
Once up and running the plant’s 8.5 tonnes per day output will rise to ten tonnes per day. “We are about breaking even at the moment and with PCI we move into profit. It is that important.”
In the meantime an investment of about £110m by Switzerlandbased steel trading firm Vanomet Holding will be key to boosting the firm’s coffers if, as expected, SSI shareholders approve the deal next month.
Mr Dryden expects a chunk of that cash will be used to fund operations at the plant and to help settle the nerves of some creditors.
The role of SSI president and owner Win Viriyaprapaikit will also be increasingly important.
He has been spending a lot more time in the UK of late and he is expected to play a more prominent role.
“This has been a challenging time for everyone,” says Mr Dryden.
“There have been plenty of highs and the odd low point. But we are all committed to taking this forward. The millionth tonne of steel was another symbol that we are heading in the right direction.”
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