Friday, July 8, 2016

News: Tata Steel confirms intention to sell South Yorkshire sites

By

Tata Steel has confirmed that it will begin a separate process for the potential sale of its Speciality Steels business, which until recently employed over 2,000 people in South Yorkshire.

The Indian-owned steelmaker previously 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.

Seven bids were immediately taken forward to the next stage but a shortlist of bidders has never been confirmed and the sale process was suspended. Since the announcement in March, there has been rising steel prices, a turnaround at Port Talbot, announcements from the Government on support for the industry, consultation on the pension scheme, a fall in the price of the pound and the EU referendum.

In a statement today, Tata Steel said that its Board has decided to look at "alternative and more sustainable portfolio solutions" for the European business. Consequently, Tata Steel has now entered into discussions with strategic players in the steel industry, including thyssenkrupp AG regarding a potential joint venture with a combination of strip products businesses.

Speciality Steels is not considered a downstream business linked to Port Talbot and Tata Steel's strip products business. It produces around 225,000 tonnes of steel, comprising around 3% of Tata Steel Europe's total output. It has a £275m 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. Until recently it employed over 2,000 people at sites like Aldwarke in Rotherham and Stocksbridge in Sheffield.

With the main sale process stopped, the sale of Speciality Steels will continue separately.

Advertisement

Koushik Chatterjee, group executive director and Tata Steel's executive director for Europe, said: "We have initiated conversations for a strategic collaboration for our European business. A potential strategic combination of strip products businesses offers the best prospects to create a premium, world-class strip steel business with the scale and scope of capabilities to compete successfully on the global stage.

"As part of this development in our European strategy, we will now also begin separate processes for the potential sale of the South Yorkshire-based Speciality Steels business and the Hartlepool pipe mills (other than the 20-inch Tube Mill) in the UK. Both of these operations are largely independent of the strip products supply chain with their own specific characteristics. Tata Steel UK has already received interest from several bidders for Speciality Steels and the pipe mills in each case and a formal process will be commencing shortly."

Roy Rickhuss, General Secretary of the steelworkers' union, Community, said that the announcement "raises many more questions" and reminded the company of its obligations. He said: "As regards the speciality business and the operation in Hartlepool, as we have said before, Tata needs to be a responsible seller, upholding its moral and social responsibilities to those steel communities.

"The sales process must test both the intentions and capabilities of any potential bidders, Tata must allow Community direct access to any bidder and there should be no further fragmentation of these businesses. Neither the speciality business nor two of the Hartlepool tube mills are part of the Port Talbot supply chain, so an argument could be made that they could have a successful future on their own with the right vision and investment.

"However, we do believe that making these businesses stand alone is unnecessary as there are significant advantages to being part of a larger steel group. Indeed, this has been an important factor in sustaining these businesses in recent years.

"This further potential fragmentation of the UK steel industry makes it all the more important that the government brings forward and supports the development of an overarching vision for steel in the UK. We believe that this is crucial to future success and we will be setting out our own vision for steel in the coming days, drawing on the collective wisdom and decades of experience of our members."

Tata Steel website

Images: Tata Steel

0 comments:

Sponsored by:
Members:
Supported by:
More news...

  © Blogger template Newspaper III by Ourblogtemplates.com 2008

Back to TOP