6
Update 12th April 2022 Façade: GIG, an Austrian Façade contractor have advised they are no
longer willing to offer fixed prices for any elements. This is as a result of a
directive from the company owners.
Mitigation: Where engaged with GIG seek to agree open and
transparent methods of monitoring key elements and valuing
increases/decreases in cost base.
• In 2020, the UK imported c.720,000 tonnes of iron ore from Russia (equivalent to over 10% of total iron ore
imports). BSL imports c.50% of its iron ore pellets from Russia. It can diversify its supply, but alternative
sources are far off (Australia and Brazil), so there is a risk that their stocks may run low. BSL currently hold
22k tonnes of iron ore and are expecting 70k tonnes more between 13th and 18th of March, which may
be loaded in Russia or Lithuania (TBC) and which cannot be offloaded in UK Ports.
• Alumina for the UK's only primary aluminium smelter (GFG-owned Alvance) is transported from a
Russian owned Irish plant - Aughinish, 100% owned by Rusal - and which may be reliant on alumina
from Russia. Alvance holds limited stock in the UK (Fort William - smelting facilities are driven by hydroelectric
power and a complex of on-site bio-diesel units) and their main operations facilities are in
France and Spain.
• Russia is also a key producer of nickel, used to manufacture stainless steel. The price of nickel has
increased sharply.
• The UK also imports c250K tonnes of steel from Russia and the Ukraine each year, and some fabricators
rely on supplies from these countries. Russia is also a producer of semi-finished metal products that are
used as components in other products. The reports around steel and rebar (see summary attached)
are of ongoing price increases driven by the availability and cost of raw material and increased
energy prices.
• With potential rationalisation of gas, energy costs would rise even more dramatically. This would result
in steel producers being unable to absorb such mammoth cost increases so steel price inflation here is
inevitable. Some mills in Spain and Italy have already ceased production. This alone will see lead times
increase and prices become less certain.
• Supply Chain Relationship Meetings are taking place regularly with our tier 1 and 2 Steelwork providers
to understand risk profiling and market intelligence. Potential concerns with regards both cost and
availability but the supply chain are working with LOR to mitigate any potential impact in the short
term.
TIER 1
William Hare
Galloway BHC
TIER 2
Galloway
DAM Structures
• Existing Rebar orders with our supply chain partners are currently being honoured across our project(s)
however pre-sanctioned material from Belarus awaiting delivery to the UK is at risk if the government
reject proposals to release pre-sanctioned items. Laing O'Rourke UK & UAE Procurement teams have
explored the supply chain options for procuring rebar from the UAE (Emirates Steel). Costs,
compliance and Logistics have been investigated, finding to date have shown if we were to procure
the steel from Emirates Steel/have the steel transported to our UK supply chain partner (Frank Brazil) cut
& bend and deliver to an LOR site in the UK the cost would be £1,015.00/t, currently we are paying
£1,090.00/t. Further discussions ongoing to mitigate current UK price increases.
Update 5th April 2022 Rebar: Current rate = £1,150.00 per tonne