Defense maker Sheffield Forgemasters, which was nationalized last summer, has asked the UK government to cancel a power deal with Russian state-owned Gazprom.
The South Yorkshire steelmaker, owned by the Department of Defense but largely independently operated, is a key supplier to the Trident submarine fleet. It was first reported by the Sunday Telegraph that it was canceling a deal with Gazprom’s UK arm.
Although Sheffield Forgemasters has its own board that has not yet decided on the Gazprom deal, it is understood MoD has made it clear to the company that ministers are hoping to close the system.
The company’s chief financial officer, Steve Hamel, said: “We can confirm that Sheffield Forgemaster has cut off all supplies to Russia and, in response to the global fuel market response to Russia’s aggression in Ukraine, the board is reviewing its power supply as a matter of urgency.” Did not agree to comment.
The expiration of the Gazprom agreement will force the steel maker to find a new supplier at a time when wholesale gas prices are rising, and will have to pay a potential penalty fee for early withdrawal from the agreement.
Sheffield Forgemasters, one of the oldest companies in Britain, became a gazprom customer when Russian business entered the UK market in the summer of 2006 by buying the Cheshire firm Penain Natural Gas. In 2013, Sheffield Forgemasters revealed that it had received a flexible deal. With Gazprom which allowed it to buy gas at a lower price a few years ago.
The news comes as UK Chancellor Rishi Sunak has called on UK companies to stop investing in Russia. He welcomed the decision by some companies, such as energy companies BP and Shell, including investment companies Aviva, M&G and Vanguard, to move away from Russian resources, and urged others to consider doing the same.
A growing number of major international companies, including McDonald’s, Coca-Cola, Ikea and Uniclo, have been leaving since Russia’s invasion of Ukraine more than two weeks ago.
MoD spent £ 2.6m on the Sheffield Forgemasters acquisition last July and has pledged to invest £ 400m over the next decade to replace the critical equipment and infrastructure needed for its military production capacity.
The government has not yet announced sanctions on Russian gas companies but has said it is “looking for alternatives” to end Britain’s dependence on Russian gas.