Saving Corus: UK govt vows to explore ‘viable options’

The UK and Welsh governments have pledged to look at “all viable options” to support Britain’s steel industry, following news that Tata Steel is looking to offload its UK steel assets, after rejecting a turnaround plan for its Port Talbot strip products division.

The governments responded to the developments in a joint statement, insisting they are committed to “working with Tata and the unions on a long-term sustainable future for British steel making.”

Speaking on BBC Radio 4’s Today programme on Wednesday, Business Minister Anna Soubry called on Tata Steel to clarify what it means by evaluating and implementing the most feasible option for divesting the assets in a “time bound manner.”

Tata needs to give “enough time to secure a buyer” which would take “months” she said. “We continue to look at all options but first want to achieve this period of time to allow a proper sale process.”

The government’s ability to intervene would be constrained by EU state aid rules, she said, adding, however, that one option would be temporarily holding the assets till a buyer can be found.

However, she did not clarify what form this could take.

When asked whether the government would consider temporarily buying the business — under temporary nationalisation — Soubry declined to comment. The Welsh government has also ruled out taking over the assets because of lack of resources.

Following a lengthy meeting on Tuesday, the Tata Steel board said it had unanimously concluded that the restructuring and transformation plan of the Port Talbot facilities was “unaffordable.”

The plan would have required “material funding support in the next two years in addition to significant capital commitments over the long term,” and was based on “very risky” assumptions, with a “highly uncertain” likelihood of delivery. “Given the severity of the funding requirement in the foreseeable future, the Tata Steel Europe board will be advised to evaluate and implement the most feasible option in a time bound manner,” it said.

National crisis Unions have called on the government to take rapid action to support the industry.

“The UK is now on the verge of a national crisis. Tata Steel withdrawing completely from the UK risks destroying our entire industry,” said Roy Rickhuss, general secretary of the union Community, who called on Tata Steel to outline a plan for being a “responsible seller”.

The Labour party lambasted the government’s hands-off approach towards the crisis-ridden steel industry, pointing to the decision of Britain’s Business Secretary Sajid Javid to go on a trip to Australia at a time that the crucial Tata Steel board meeting was known to be taking place, while the party’s leader Jeremy Corbyn is urging Prime Minister David Cameron over the crisis in the industry.

The European steel industry has shed 7,000 jobs over the past nine months alone. In October, the Redcar steel plant, once owned by Tata Steel, was closed by Thai steel maker SSI, while Tata Steel put its long products division up for sale.

While the Klesch Group pulled out of discussions, Tata Steel is in discussions with private equity group Greybull, while two Scottish assets were last week sold to Liberty House, the steel and metals group founded by Sanjeev Gupta, which has been building up its UK steel portfolio, including parts of Lord Swraj Paul’s Caparo Group.

Liberty House is likely to be considered one of the likely contenders for parts of Tata Steel’s current divestment plans.

Huge challenge A spokesperson for Liberty House said that while the downstream operations would be of interest, “taking on the iron and steelmaking facilities present a huge challenge.”

“Our engagement will depend very much on what Tata and the government are prepared to do to help save these businesses.”

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