Thursday, July 14, 2016

News: Government ready to support Speciality Steel


The Government believes that there are good prospects for a wholly commercial transaction for Tata Steel's specialities business in South Yorkshire and is willing to talk to potential bidders about their proposals and about providing support for the long term competitiveness of the business.

Following a board meeting last week, the Indian-owned steelmaker decided on a separate process for the potential sale of its Speciality Steels business, which until recently employed over 2,000 people at sites like Aldwarke in Rotherham and Stocksbridge in Sheffield.

The Government said it was working with Tata to ensure a credible sale process but does not believe that the specialties business is likely to require the same level of support and investment to secure a sale as the strip business based at Port Talbot. Here, the Government confirmed that a package of support worth hundreds of millions of pounds would be made available on commercial terms to potential buyers of Tata Steel UK.

Yesterday's Westminster debate on the implications for the UK steel industry of the outcome of the EU Referendum was used by MPs to urge the Government to do all it can to support the industry on pensions, energy costs, business rates, procurement and overseas trade.

Having written to and met with ministers, local Rotherham MPs raised concerns over the specifics of the Speciality Steel sale and urged the Government to do all it can to ensure that Tata is a responsible seller.


In response to a letter from John Healey MP, Sajid Javid, Secretary of State for Business, Innovation and Skills, said: "Tata have not provided information as to how they will run this sales process, but we will be clear in our discussions with them that we expect Tata to pursue options which offer the best overall offer for the whole of their specialities business, and the best prospects for its future sustainability. The Government remains in close contact with Tata Group, and is committed to working with Tata to ensure a credible sale process.

"We understand that a number of offers were received for the speciality steel business as part of the sale process for the whole of Tata Steel UK's operations. This indicates there are good prospects for a wholly commercial transaction for both the pipe mills and specialities business, similar to that achieved when the Tata Long Products business was sold to Greybull Capital. Therefore, at this point we do not believe that the specialties business is likely to require the same level of support and investment to secure a sale as the strip business based at Port Talbot.

"We remain in close contact with Tata about the sale, and will continue to monitor the situation closely. I would like to take this opportunity to assure you that we are willing to discuss the proposals of any potential bidders with them. I also understand that during your meeting with Anna Soubry, you raised the question of whether the Government would be willing to consider providing support that would drive the long term competitiveness of the business, in areas such as R&D and skills. To date, no such requests have been made by any of the potential bidders, but we would be willing to consider requests that are made in future.

"Finally, I would like to emphasise the Government's ongoing commitment to working with the wider steel sector to improve the business environment in the UK and to ensure that the steel industry within the UK is one that thrives. There are a number of working groups within the Steel Council that are striving towards that goal and we are acting on recommendations that have been laid out by them."
Sarah Champion, MP for Rotherham, said: "Tata Steel's recent change of course in strategy for its British business in light of the referendum vote presents dangers and opportunities, particularly for Speciality Steels, which is based in Rotherham and Stocksbridge. It is a tremendous asset to the British economy.

"There is an unfortunate tendency to view the British steel industry as a relic - an industrial throwback to a different economic age. That could not be further from the truth for the whole industry, but especially for Speciality Steels. Speciality Steels is a world-leading business at the cutting edge of technology and expertise. It produces steel for the most complex roles, from aerospace to motorsports. Members may have watched the British Grand Prix, where the cars had steel from Rotherham and Stocksbridge in them. The division's list of customers speaks for itself, running from Rolls-Royce to Lockheed Martin and from Boeing to BAE. Rotherham also houses Tata's research centre, which continues to develop world-leading advances in steel production and technology to meet the most difficult demands.

"However, that vibrant and dynamic business cannot continue to lead the world with one hand tied behind its back. We must act on the underlying problems the industry faces as a whole. Tata's announcement that the division is to be sold separately is cautiously welcomed. Speciality Steels is a great asset, and I am sure a number of bidders will be forthcoming, but we must make certain that the right buyer and not just any buyer is found to allow the business to continue to thrive. This can be no fire sale.

"Tata's Speciality Steels unit could be a fantastic investment opportunity for someone. As well as producing some of the best steel in the world and being at the cutting edge of innovative and highly profitable steel products such as powdered steel, it has a highly regarded workforce in Stocksbridge and Rotherham. It will have a tremendous future with the right investment.

"Speciality Steels has a bright future, and I am confident that the right buyer will quickly come forward. I know that the city region and Sheffield and Rotherham councils are determined to do whatever they can to help the business. The Government have repeatedly claimed to be committed to steel. That commitment must not slip, despite the economic obstacles we face."

Tata Steel website

Images: Tata Steel


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