Tata, thyssenkrupp Discussing Joint Venture for European Strip Businesses
07/08/2016 - Tata Steel has suspended the sale of its U.K. business and is now thinking about putting its strip operation into a joint a venture with other steelmakers, including Germany’s thyssenkrupp AG, Tata announced on Friday.
“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,” Koushik Chatterjee, a group executive director and Tata Steel’s executive director for Europe, said in a statement.
However, he warned that there are no guarantees that any deal will be reached.
“It is too early to give any assurances about the success of these talks,” he said, adding that a deal would require labor and government support and revisions to the British Steel pension plan.
The announcement followed a Tata Steel board meeting in Mumbai, where the board assembled to discuss the future of the steelmaker’s U.K. business. Tata announced in March that it would look to exit the U.K. and sell the business, which includes the integrated Port Talbot works, the country’s largest steel facility.
Seven entities had been bidding on the operation. But the outcome of that sale has been clouded in recent weeks amid speculation that Tata might hold onto the business or break it up. The U.K.’s decision to leave the European Union further muddied the waters.
Friday’s announcement will only renew uncertainty for steelworkers, the (London) Financial Times reported.
“Any deal could lead to large numbers of job cuts as part of an attempt to find further cost savings in the business. A combination would involve Tata’s large Ijmuiden steel plant in the Netherlands,” it said.
As part of the announcement, Tata also said it would separately put its specialty steel business and two of its English pipe mills up for sale.
“Tata Steel U.K. has already received interest from several bidders for specialty steels and the pipe mills in each case and a formal process will be commencing shortly,” Chatterjee said.
Roy Rickhuss, general secretary of the steelworkers' union Community, told The (London) Telegraph, that the new tack will certainly continue the uncertainty for the union’s members.
"It seems Tata believe this is in the best interests of sustaining steelmaking in Port Talbot and its downstream operations, but the test will come in the next steps that Tata takes and how the dialogue with thyssenkrupp progresses," he told the newspaper.
The Guardian newspaper reported that Tata and thyssenkrupp had discussed a deal earlier this year, but none came to pass as thyssenkrupp had concerns about pension liabilities and questions about its ability to turn a profit.
“Since then, the government has offered loans of up to £1 billion to support Tata Steel and revealed plans to restructure the pension scheme,” the newspaper said.
However, he warned that there are no guarantees that any deal will be reached.
“It is too early to give any assurances about the success of these talks,” he said, adding that a deal would require labor and government support and revisions to the British Steel pension plan.
The announcement followed a Tata Steel board meeting in Mumbai, where the board assembled to discuss the future of the steelmaker’s U.K. business. Tata announced in March that it would look to exit the U.K. and sell the business, which includes the integrated Port Talbot works, the country’s largest steel facility.
Seven entities had been bidding on the operation. But the outcome of that sale has been clouded in recent weeks amid speculation that Tata might hold onto the business or break it up. The U.K.’s decision to leave the European Union further muddied the waters.
Friday’s announcement will only renew uncertainty for steelworkers, the (London) Financial Times reported.
“Any deal could lead to large numbers of job cuts as part of an attempt to find further cost savings in the business. A combination would involve Tata’s large Ijmuiden steel plant in the Netherlands,” it said.
As part of the announcement, Tata also said it would separately put its specialty steel business and two of its English pipe mills up for sale.
“Tata Steel U.K. has already received interest from several bidders for specialty steels and the pipe mills in each case and a formal process will be commencing shortly,” Chatterjee said.
Roy Rickhuss, general secretary of the steelworkers' union Community, told The (London) Telegraph, that the new tack will certainly continue the uncertainty for the union’s members.
"It seems Tata believe this is in the best interests of sustaining steelmaking in Port Talbot and its downstream operations, but the test will come in the next steps that Tata takes and how the dialogue with thyssenkrupp progresses," he told the newspaper.
The Guardian newspaper reported that Tata and thyssenkrupp had discussed a deal earlier this year, but none came to pass as thyssenkrupp had concerns about pension liabilities and questions about its ability to turn a profit.
“Since then, the government has offered loans of up to £1 billion to support Tata Steel and revealed plans to restructure the pension scheme,” the newspaper said.
