A Czech minister has demanded an investigation into the sale of carbon emission allowances by Sanjeev Gupta’s steel operations in the country, saying that the metal tycoon’s company had broken a promise not to do so.
Lubomir Zaoralek, the Czech minister of culture, said in a statement released on his department’s website on Friday that he would request an investigation into the transaction.
“Today I learned that Liberty Ostrava had broken its promise and sold emission allowances worth more than Kcs1bn to Romania on the night of April 29-30,” he said.
A proposed sale of the carbon credits has sparked controversy in the Czech Republic, with trade unions protesting against the plan amid fears that the plant would lose out on funds to modernise its operations.
The dispute comes amid mounting concerns over the fate of GFG, Liberty’s parent, which has been scrambling to refinance its operations after the collapse of its main lender, Greensill Capital, in March.
GFG confirmed that the plant had sold 1m emission allowances, estimated to be worth €40m, to the group’s sister plant, Liberty Galati, in Romania.
“The purchase has been conducted at today’s market price, which will be paid to Liberty Ostrava immediately, with an opportunity for it to buy back the allowances at a lower price in the future,” GFG said.
“An initial legal proposal to monetise a proportion of the company’s excess allocation, with multiple measures to protect the Ostrava business, was unhelpfully obstructed by the unions and the Czech government earlier this month,” GFG added, noting that it had since managed to carry out the amended transaction.
Europe’s carbon trading emissions scheme is part of its policies to tackle climate change.
Big polluters, such as steel works, are given a certain amount of carbon allowances for free every year. The credits are linked to individual plants and issued every February. Companies must hand over enough allowances to cover each tonne of emissions by the end of April the following year.
It is understood that Liberty Ostrava currently has emissions allowances worth about Kcs5.6bn. Earlier this month the Financial Times reported that its sister plant in Romania faced a carbon credit shortfall. The market price of these allowances is currently at a historic high.
Gupta’s metals conglomerate GFG Alliance bought the country’s largest steelworks in July 2019 from ArcelorMittal.