India’s Tata Steel on Wednesday (June 1) completed the part-sale of its European assets, safeguarding 4,800 jobs, but thousands more are threatened with no buyer found for the rest of the business.
Tata Steel UK announced completion of the sale of its European piping business to Greybull Capital, a British-based family investment firm for an undisclosed sum.
The deal, hailed by Tata, the British government and unions, means the return of the British Steel brand for the first time since 1999.
“From today the Long Products Europe business will trade under the name of British Steel,” Tata Steel UK said.
“All together the business employs 4,800 people – 4,400 in the UK and 400 in France. The sale follows an accelerated process of negotiations between Tata Steel UK and Greybull Capital.”
Britain has been racing to find a buyer for Tata’s UK assets – and save around 16,000 jobs – after the company’s shock announcement in March that it was selling because of a global oversupply of steel, cheap imports into Europe, high costs and currency volatility.
Tata Steel in April said it had agreed to sell its Long Products Europe (LPE) division, whose chief asset is the Scunthorpe works in northern England, to Greybull Capital. Long products are items such as steel pipes that are sold by length.
Tata is still looking for a buyer for the rest of its British assets, including the Port Talbot steelworks on the south Wales coast, Britain’s biggest steel plant, which employs 4,000 workers.
“The sales process for the wider UK business is continuing,” Tata said in a statement. “Although we have been clear that the process needs to be time bound – to avoid uncertainty for employees and customers – we have not set a deadline on when it needs to conclude.”
Tata Steel last month said it had selected seven bidders as potential buyers of its remaining loss-making UK activities.
The British government has, meanwhile, said it would contribute hundreds of millions of pounds to any potential deal and take a 25 per cent stake in the assets.
Tata said it would “not be commenting on the agreed price with Greybull”. It had been widely reported LPE was sold for a nominal £1, while Greybull said it would arrange a £400-million investment and financing package as part of the deal.
The UK assets formerly belonged to Anglo-Dutch steelmaker Corus, which Tata bought for $13 billion in 2007 – at the height of Chinese steel demand and before the global financial crisis.
Corus had been formed through the merger of British Steel and Koninklijke Hoogovens in 1999.
“The name British Steel has a long and proud history and… (the Greybull deal) underlines the government’s belief that there really is a viable, sustainable future for world-class steelmaking in this country,” business secretary Sajid Javid said.
Len McCluskey, general secretary of Britain’s biggest union Unite, said the “first day of trading for British Steel is testament to the skills of the workforce and their union representatives who have worked hard to secure the future of Tata Steel’s former long products division”.
From a rich beginning, Britain’s steel industry has dwindled after losing foreign and domestic share to cheaper rivals. It accounted for 40 per cent of the world’s steel production in 1875 thanks to huge factory output in Sheffield.