Accounts for UK Export Finance show it gave buyer’s credit worth £80m to Russian iron ore company owned by billionaire

UK taxpayers subsidised cheap loans to a foreign metals company owned by a multibillionaire while the British steel industry was fighting for survival.

Accounts for UK Export Finance (UKEF), which lends money to companies planning to buy products from British exporters, show that it gave £82.8m in “buyer’s credit” to Lebedinsky GOK, which mines iron ore, a key element in steel production.

Lebedinsky is part of the metals and mining company Metalloinvest, which is owned by the Uzbek-born tycoon Alisher Usmanov, who has a stake in Arsenal.

UKEF’s support for Lebedinsky helped finance a contract with Midrex UK, a subsidiary of the US company Midrex Technologies, which is owned by Japan’s Kobe Steel.

Accounts for Midrex UK show that it employed six staff and paid no corporation tax in Britain.

Midrex Technologies says it set up a UK office to take advantage of the taxpayer-backed UKEF scheme. The company’s website says Midrex UK was “specifically established in the heart of one of the world’s financial hubs to provide our customers with access to valuable project financing”.

Gareth Stace, the director of UK Steel, said: “The UK steel sector has been in the deepest crisis for more than a generation in the past 12 months for two key reasons: higher costs resulting from punitive government policy and the massive rise in dumping of steel from countries such as Russia.

“Learning that government money is being pumped directly into the Russian steel sector beggars belief and actively goes against everything we have been calling on the UK government to do, to ensure that the UK steel sector can compete on a fair and level playing field.”

The Labour MP Stephen Kinnock, whose Aberavon constituency includes the Port Talbot steelworks, the future of which has been under threat, called on the business secretary, Greg Clark, to investigate the loans immediately.

“If it is true that UKEF has been underwriting loans for steel projects that deliver relatively little tangible benefit to the British economy, and which are actively supporting the foreign steel industry, then a number of questions will have to be answered by the Department for Business, Energy and Industrial Strategy,” Kinnock said.

“The British steel industry has been battling for survival for some time now and so it beggars belief that British taxpayers have been underwriting loans that are supporting the activities of foreign companies that are operating in direct competition with our very own steel industry.

“British steelworkers make the best steel that money can buy. They are not looking for special treatment, but they are looking for a government that is going to fight their corner – a government that is doing all it possibly can to support and strengthen this vital foundation industry. Instead, they have a government that has demonstrated nothing but incompetence and indifference.

“I urge the new secretary of state to conduct an urgent, comprehensive and detailed inquiry into this case.”

A spokesman for Midrex said while Midrex UK was set up “partly at least” to take advantage of UKEF, British companies had benefited from its use of buyers’ credit.

“Under our contract, Midrex UK placed a number of subcontracts with various UK companies to supply equipment, goods and services as required under our main contract with Lebedinsky GOK,” a spokesman said.

“These subcontracts ran to tens of millions of dollars of work that was placed in the UK, which, in the absence of UKEF support, may not have all been won by the UK.”

UKEF said: “UK Export Finance’s mission is to ensure that no viable UK export fails for lack of finance or insurance, supporting UK economic growth and employment.

“We support UK businesses and do not discriminate against those with non-UK parent companies. Midrex UK is a UK company, and with our support, [it] sourced goods from UK suppliers in the Midlands for this transaction, supporting the UK manufacturing industry and jobs in the sector.”

 

Source : theguardian.com

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