Tata Steel is in talks to sell its European long products business to an investment group in a move that could support 4,700 jobs and keep open several British plants threatened with closure.
Tata said it had entered exclusive talks with Greybull Capital to sell a number of plants including its steelworks in Scunthorpe and Lincolnshire, and mills at Dalzell and Clydebridge in Scotland that are being mothballed.
Other sites included in the talks are mills in Teesside and northern France, an engineering workshop in Workington, Cumbria, and a design consultancy in York. Tata has been trying to sell the long products business, which makes steel used in construction, amid a supply glut and tumbling prices.
The company, which owns the remnants of the former British Steel, announced in October that it planned to cut almost 1,200 jobs at Scunthorpe and shut the mills in Dalzell, in Motherwell, and Clydebridge in Cambuslang, near Glasgow. Tata’s decision underlined the crisis facing the British steel industry after the closure of the Redcar steelworks on Teesside earlier that month.
Karl Koehler, chief executive of Tata Steel Europe, said the talks were at an early stage but came at a critical time for the industry: “We have been working hard to explore all options that could provide a future for the long products Europe business. We will now move into detailed negotiations with Greybull Capital.”
Greybull is a family-run fund that invests in struggling companies in the hope of making a profit. Its investments have included the airline Monarch, which hasreturned to profit after nearly collapsing a year ago, Morrisons convenience stores, and the now defunct Comet chain.
Greybull said: “Greybull Capital LLP confirms that it has signed a letter of intent with Tata Steel to enter exclusive discussions on the possible acquisition of the long products Europe business based in Scunthorpe, North Lincolnshire. Whilst this is an important milestone, much work remains to be done to reach a successful outcome.”
Tata said it had worked with unions and management to seek a future for the long products division. Unions gave the news a guarded welcome and said they would work with Greybull to secure a long-term future for the business.
Harish Patel, the Unite union’s national officer for metals and foundry, said: “This is good pre-Christmas news for the various sites, including at Scunthorpe. However, there is a lot of work to be done in formulating the details and the future business plan. We will need to consider whether jobs are safe with this potential sale, the impact on the supply chain, and whether the current terms and conditions for the workforce are affected.”
The Scottish business minister Fergus Ewing said: “Our primary aim is to secure a future for Scottish steel. While the development is potentially welcome, the agreement between Tata Steel and Greybull Capital LLP is still at a very early stage and there can be no guarantees it will proceed – or that it will lead to a secure future for jobs at the plants involved.”