India's Tata Steel begins formal sale of UK unit
Indian giant Tata Steel announced Monday the sale of a major European division employing 4,800 people in Britain and France, as it placed the rest of its loss-making British operation on the market.
The British government has been scrambling to find a buyer for Tata's assets -- and save 15,000 jobs -- after the company's shock announcement last month it was selling its British operation due to a global oversupply of steel, cheap imports into Europe, high costs and currency volatility.
Britain's Business Secretary Sajid Javid told parliament that the government could co-invest with private sector bidders in a bid to keep Tata Steel's UK assets going.
As it kicked off the sale process, Tata Steel said it had agreed to sell its Long Products Europe (LPE) division -- whose chief asset is the Scunthorpe steelworks in eastern England -- to Greybull Capital, a British-based family investment firm.
Long products are items such as steel pipes that are sold by length.
"This transaction will offer a future for the LPE business and its 4,400 employees in the UK," said Hans Fischer, chief executive of Tata Steel's European operations.
Tata Steel is still looking for a buyer for the rest of its British assets including the Port Talbot works on the south Wales coast, Britain's biggest steel plant, which employs 4,000 workers.
- UK government could step in -
The LPE deal is expected to complete within eight weeks, subject to conditions being met.
LPE, which will be renamed British Steel, was sold for a nominal £1 ($1.40, 1.25 euros). Greybull said it is arranging a £400 million investment and financing package as part of the deal.
The sale also includes two mills, a port terminal, an engineering workshop and a design consultancy, all in Britain, as well as a mill in northeast France which employs 400 people.
After a fortnight of pressure from the opposition, trade unions and the press over the government's handling of the crisis, Javid said the state could get involved in the sale of Tata Steel's remaining UK operations.
He said he had been in contact with potential buyers.
"This includes looking at the possibility of co-investing with a buyer on commercial terms," he said, adding that a sale to a private buyer would still be the best way forward.
Javid flew to India last week to meet company executives and has said the government will make every effort to secure a serious buyer for the Port Talbot plant and other assets.
Tata Steel Europe's group executive director Koushik Chatterjee said he wanted to sell their British assets as a whole rather than splitting up the business.
"We will run this process in a credible manner but it is important we don't have a very long, uncertain period for the employees, suppliers and customers," he said.
- Welsh plant losing money -
Metal processing company Liberty House is looking at the Port Talbot plant, although the group's president Sanjeev Gupta is not keen on taking on its pension and environmental liabilities, and wants relief from high energy prices.
Port Talbot is losing £1 million a day in the face of high energy costs and plunging prices caused by a chronic global oversupply of steel and a glut of cheap imports, particularly from China.
Greybull partner Marc Meyohas would not be drawn on whether Greybull was interested in buying other parts of Tata Steel's UK assets.
Europe as a whole has been hit by the steel crisis.
Around 45,000 steel workers rallied across Germany in a day of action dubbed "Steel is the Future", voicing fears over their jobs.
The head of US Steel accused Britain and the wider EU of negligence over China dumping cheep steel on world markets.
"The Europeans have been more negligent than anybody," Mario Longhi, chief executive of the biggest US steelmaker, told the Financial Times.
French economy minster Emmanuel Macron on Monday said Britain was "guilty of condemning the steel industry" by "naively" blocking EU attempts to impose higher tariffs on Chinese steel.
© 2016 AFP