Government in no financial danger over smelter deal, MSPs told

The Scottish Government’s director of economic development, Colin Cook, told MSPs they were ‘more than covered’.

The Scottish Government offered financial support to keep the smelter in operation (Sandy Young/PA) (PA Archive)

The Scottish Government is in a “robust position” despite facing a potential financial exposure of £161 million due to its involvement in the Lochaber aluminium smelter, MSPs have been told.

Government officials said there was extensive security on the deal and they were “more than covered”.

The Public Audit Committee at Holyrood was told the Government’s financial exposure went from £37 million in 2020 to £161 million in 2021.

Ministers gave a financial guarantee to the smelter’s owner, the GFG Alliance, when they bought the plant in Fort William in 2016.

The smelter has been described as an important economic asset for the West Highlands (Sandy Young/PA) (PA Archive)

However, GFG’s main lender, Greensill Capital, collapsed last year.

The Scottish Government’s director of economic development, Colin Cook, told the committee: “There are some well known financial issues that they are dealing with but, as regards the Lochaber asset, we believe that the value of the provision is more than covered by the security package that we have when it comes to protecting the public finances.

“That includes the smelter. It includes the hydro, it includes some extensive land holdings.”

He continued: “I think we’re in a robust position as one can be from a financial point of view at the moment.

“And, to repeat, we are in a very robust position because we have protected really valuable jobs and a really valuable strategic asset in the West Highlands.”

Committee convener, Richard Leonard, said the GFG Alliance was now the subject of an investigation by the Serious Fraud Office, and asked what contingencies the government had in place.

Mr Cook said that while some of GFG’s assets in England were being wound up by HMRC, the Scottish plants were not a part of that.

He said: “It is a complicated group and there are undoubtedly arrangements across that group, there may well be loans from one part to the other.

“So there is always a potential that the actions of the HMRC do spill over into the assets in Scotland, but at the moment that’s not the case.”