Acquisition of Rio Tinto Estate by Liberty Aluminium: FOI release

FOI reference: FOI/17/02864
Date received: 27 November 2017
Date responded: 9 January 2018

Information requested

You asked the following questions in relation to the contractual agreement between Scottish Ministers and Liberty Aluminium related to the Lochaber Smelter:

1. How much public money has the Scottish Government contributed toward the aquisition of the 'Rio Tinto Estate' in partnership with Liberty Aluminum? What does 75% of the shareholdings amount to as a figure?

2. On what terms was this figure agreed to? Is this effectively a loan to be repayed by Liberty Aluminum, or does 75% of the estate now belong to the Scottish public?

3. If the 'floating charge' detailed at Companies House, is a repayable loan, when does it have to be repayed? Why was this the chosen form of the agreement?

4. Alternatively, if 75% of the estate now belongs to the Scottish public, why was this exchanged for only 25% of shareholder voting rights?

5. Who knew about this, and was involved in making the decision, and formulating the agreement?

6. Who was consulted about this? Which political or community representatives of residents in Lochaber were either aware of this agreement, party to discussions of it, or contributed to its design and implementation?

Response

The answer to each question is provided below:

1. The Scottish Government has contributed no funding toward the acquisition of the 'Rio Tinto Estate' by Liberty Aluminium.

The notification of the Scottish Ministers as a Person with Significant Control in fillings at Company House (which is stated as holding 75% or more of the shares in the company) is due to a point in Scots Law regarding Share Pledges which requires that pledges be recorded in a company's Register of Members.

The Share Pledge granted in favour of the Scottish Ministers is part of the security package that was agreed when the Scottish Government took on the underwriting of the Lochaber Smelter's long-term power purchase arrangements.

2. As stated in the answer to question 1, the Scottish Government has not provided any public funds to Liberty Aluminium, either in the form of grant or loans, to purchase land or business assets from Rio Tinto. The Scottish Government does not own any part of the Lochaber estates which were formerly the property of Rio Tinto.

3. As stated in the answers to questions 1 and 2, the Scottish Government has not loaned funds to Liberty Aluminium. All securities registered in favour of Scottish Ministers relate to the Government's underwriting of the Lochaber Smelter's long-term power purchase arrangements.

The underwriting arrangement that exists, agreed on commercial terms and for which the Government charges a commercial fee, is designed to guarantee long-term predictable energy costs for the Lochaber Smelter and thereby help to safeguard the livelihoods of the over 300 people whose employment is associated with the Smelter – that is, those employed directly, through the supply chain and via induced spending within the wider community.

4. Please see the responses to questions 1 and 2 above.

5. The sale of the Rio Tinto assets in Lochaber to the Liberty Group was a commercial process carried out over many months. All parties engaged in the process – bidders and public bodies – were bound to adhere to Rio Tinto's strict confidentiality agreements during the sale process.

The underwriting agreement agreed collectively by Scottish Ministers to support the Lochaber Smelter was approved in advance, consistent with Parliamentary procedures, by the all-party Finance and Constitution Committee of the Scottish Parliament. The Scottish Government's offer of support was made known on an even-handed basis to all short-listed bidders and was communicated with the full knowledge and support of the vendor Rio Tinto.

6. Please see the response to question 5 above.

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