Monday, April 25, 2016

News: Albion Steel's reported interest in Tata's Speciality Steel business

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A national newspaper is reporting that a group of experienced professionals from the region's steel industry are the latest to show an interest in the South Yorkshire operations of Tata Steel.

The Indian-owned steelmaker recently concluded that it is exploring all options for portfolio restructuring including the potential sale of Tata Steel UK, in whole or in parts. The formal process began on April 11 with contact made with 190 potential financial and industrial investors worldwide.

Sites in Rotherham and Stocksbridge are part of Tata Steel's Speciality Steels business that produces around 225,000 tonnes of steel, comprising around 3% of Tata Steel Europe's total output. It has a £275m of turnover and is Tata Steel Europe's only Electric Arc Furnace (EAF) based business, specialising in carbon, alloy and stainless steels for demanding applications like aerospace, motorsports and oil and gas.

A report in the Financial Times states that Albion Steel is examining a possible takeover and "envisages investment of £200m to introduce new technology for producing strip steel and changes in the way the assets are used."

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Albion Steel hit the headlines last year when it was reported that it has been studying the feasibility of building the first carbon steel plant in the country for forty years.

A brownfield site in Sheffield was identified for a facility employing 200 people that would use newly-developed direct casting technology to supply flat products based on scrap-fed mini-mill production.

Investors were being targeted for the operation but the FT states that Albion Steel "is now looking at information from Tata to assess the viability of its restructuring plan and is also understood to be actively speaking with a range of possible funding sources."

Albion Steel is led by co-founders Dr Rod Beddows and Tony Pedder OBE.

A former Master Cutler and current chairman at Sheffield Forgemasters, Tony Pedder joined British Steel Corporation in 1972 and came to Sheffield in 1986 as chief executive of British Steel's Stainless Division (now Outokumpu). He was on the main board in 1999 when British Steel merged with Dutch steelmaker Hoogovens, creating Corus plc, of which he became group chief executive in 2001.

Dr. Rod Beddows is a strategy consultant who advised Tata Steel on the acquisition of Corus to create the world's fifth largest steel company in 2006.

A spokesperson from Albion Steel Ltd, said: "Albion Steel Limited was established to bring new steel manufacturing technology to the UK and is in the process of developing its business plan, locating a potential site and securing further investment.

"The recent Tata problems highlighted an unexpected opportunity to combine the Albion concept with the Tata Steel Speciality Steels business in an innovative structure which may potentially include other metals producers in the region.

"This opportunity is a complex one which has best prospect of successful execution if Tata is prepared to approach its disposal plans in a different way and to engage strategically with Albion and other interested parties to seek a negotiated structure."

Tata Steel reiterated its policy last week that it was not naming, confirming or commenting on any potentially interested investor or bidder.

Images: Tata Steel

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