Tuesday, April 5, 2016

News: Tata's Rotherham plant is viable

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Anna Soubry MP met with managers, workers, unions, MPs, local councillors and representatives of the Sheffield City Region LEP at Aldwarke, Rotherham yesterday - with the overriding feeling that there is a future for steelworks in South Yorkshire.

The Government has been working on finding a long-term sustainable future for steel making across the UK after a shock announcement from Tata Steel last week led to an even more uncertain future at its UK sites. All options for portfolio restructuring are being examined including the potential sale of Tata Steel UK, in whole or in parts.

Investment in 2005 saw the Rotherham site at Aldwarke become the focus for steel making, casting and rolling of specialist steels. The steel is manufactured at the Rotherham site before undergoing further refining at the Stocksbridge plant or the Thrybergh Bar Mill to improve the quality.

Restructuring in 2012 saw the Bar business integrated into its Speciality Steels business when Tata Steel announced that it was investing a further £2.75m in the Rotherham site.

In July last year, the Indian-owned steelmaker announced proposals for the next stage in its plans to refocus its speciality and bar business on high-value markets such as aerospace which included changes that has resulted in a reduction in employee numbers, mainly at its Rotherham-based bar business. Around 500 jobs of the 2,000 in South Yorkshire were at risk with many employees working their last shifts last week.

The Minister of State (Minister for Small Business, Industry and Enterprise) described the specialist steel industry in South Yorkshire as "world class" adding that the "Government will do everything it can to secure its future."

She has also called on suppliers and customers to keep on supporting Tata Steel in Rotherham and Stockbridge.

A report to the Sheffield City Region LEP last year described the strategic importance of Tata Steel to the Sheffield City Region, estimating that it has over 1,000 suppliers.

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Writing in the Huffungton Post, Sarah Champion, the MP for Rotherham who attended the meeting, said: "Whilst I'm pleased the Minister for Industry now understands what we actually manufacture (an unkind soul would say she should have known this already) what concerns me is what will happen next. Tata needs to give clarity if the awful fate hanging over Port Talbot applies to all its UK concerns. If so, what will the Government do to support the industry in the short term while a responsible buyer is found? Soubry talked the talk, she even mentioned the ‘N’ word (nationalisation!) but will she act?

"We need to be given confidence that the Government does have a long term strategy for steel and will also intervene in the short term. These acts would give confidence to the market and give a breathing space so we have enough time to find a buyer who is committed to making sure the industry flourishes, rather than just making a quick buck through asset stripping. With a sale deadline mooted as four to six weeks, the time for PR is over. We need fast, dramatic intervention from Government or our steel industry will be lost forever."

Prospective buyer, Sanjeev Gupta, chief executive officer at Liberty House, spoke to Bloomberg this week and explained the prospects for different parts of Tata Steel's UK business. Liberty House, an international steel and non-ferrous metals group, has already taken on plants in Newport and stepped in to save operations in Scotland.

Gupta described how downstream businesses that roll and refine steel products are more easy to solve than the "liquid end" of production that use blast furnaces like Port Talbot. Potential solutions include making products from imported steel slab or from domestically available scrap by replacing blast furnaces with Electric Arc Furnaces (EAF) to make "green steel."

Alloy and special steels are made at Tata's scrap-fed mini-mill complex in Rotherham which utilises the more modern Electric Arc Furnace steelmaking route. Ultra-pure remelted steels are made at the nearby Stocksbridge works.

Labour MP, John Healey warned the Government of the big shortfall in business rates if the worst comes to the worst and the steelworks close.

Last year Cllr. Chris Read told members that: "If Tata Steel were to relocate away from Rotherham, the Council would stand to lose its 49% share of the business rates collected on works and premises currently occupied by Tata Steel within the Borough. This equated to a loss of revenue to the Council of c. £1.5m p.a. in 2015/16 terms."

With councils in the future set to keep 100% of business rates Mr Healey has written to the Business Secretary, Sajid Javid, warning: "When the Government changes to "full retention" of business rates by 2020, the council will bear the full £3.2m loss.”

"Beyond this, there are a further 100 or so Rotherham-based companies involved in the supply chain to Tata whose annual rates bill is around £2.4m. So, altogether the closure of this firm could lead to a 7% or £5.8m reduction in business rates raised.

"If you want to demonstrate your support for UK steel and UK steel communities, then I ask you to confirm that you will guarantee to fill the business rates gap in full."

Images: Tom Austen

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