The relationship between Liberty Steel and the Hungarian government is under severe strain due to ongoing issues at the Dunaújváros steel plant. The Hungarian government has accused Liberty Steel of failing to pay salaries and delaying the resumption of production, raising the specter of bankruptcy and liquidation for the plant. This conflict has intensified following a petition by energy supplier ISD Power to liquidate the plant's rolling division due to unpaid energy bills.
The Ministry of Economy in Hungary has demanded that Liberty Steel immediately address the salary arrears for its employees at the Dunaújváros facility. The government criticized the company for not fulfilling its commitments to restart production and improve operations. Despite receiving substantial government support until June last year, which helped preserve jobs and support families, Liberty Steel has been accused of misleading the public and failing to deliver on its promises.
In response to the ongoing crisis, the Hungarian government has passed a resolution to expedite bankruptcy proceedings and appoint a receiver to ensure that employees receive their wages. This move could lead to the liquidation of Liberty Steel’s operations in Hungary if the company remains unable to resolve its financial difficulties. The government's readiness to intervene underscores its commitment to protecting workers and ensuring they are compensated through the wage guarantee fund if necessary.
The situation marks a significant downturn in relations between Liberty Steel and the Hungarian government, which were previously collaborative in efforts to keep the Dunaújváros plant operational. Liberty Steel has cited difficulties in securing working capital from Hungarian banks as a major barrier to resuming production. The company attributes these challenges to the instability of the European steel market, which has affected its ability to secure necessary financing.
Liberty Steel representatives have expressed their disappointment with the lack of progress in discussions with stakeholders. Although the company managed to pay salaries last month, it had hoped this would buy time to find sustainable solutions for the plant's operations. Unfortunately, the efforts made so far have not been sufficient to restart production, leaving the plant's future uncertain.
To mitigate the impact on employees, Liberty Steel announced that an interim administrator is facilitating salary payments through a salary guarantee fund. This measure aims to protect employees from financial losses while the company explores strategic options for the plant's future. Liberty Steel has also stated its willingness to collaborate with all parties involved to preserve the plant and find a viable path forward.
Currently, the Dunaújváros plant's blast furnace remains inactive, and its rolling lines are only sporadically operational. In a bid to modernize the facility, Liberty Steel began closing two coke oven batteries in June. Additionally, plans were announced in August for a €1.3 billion financial guarantee from China to support the plant's conversion to electric arc steelmaking, signaling potential long-term changes in the plant's operations.
