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Tata Steel to Start Formal Sales Process for U.K. Business Next Week
04/06/2016 - Tata Steel will launch the formal sales process for is ailing U.K. business on 11 April, according to a U.K. official.
Sajid Javid, the U.K.’s business secretary, said in a series of Tweets today that there is no timeframe for a sale, but that Tata Steel “will allow a reasonable period to find a buyer.”
Javid's Tweets followed meetings in India with Tata Steel leaders about the company’s planned retreat from the U.K. Javid wrote on Twitter that the meetings were “constructive and positive.”
Last week, Tata announced that it was giving up on its U.K. business and would look to divest it as a whole or in parts, saying that it saw no feasible path toward profitability. Its U.K. business includes the integrated Port Talbot Works, the U.K.’s largest steelmaking facility.
The move leaves the future of steelmaking in the U.K. -- and the thousands of jobs it supports -- in question.
There have been calls to temporarily nationalize the business to ensure it is preserved for any potential buyers. However, U.K.
Prime Minister David Cameron has said nationalization is “not the right answer.”
But allowing the plants to close doesn’t seem to be, either.
The (India) Economic Times reported that closure of Tata Steel’s operations would create a significant hole in the U.K. supply chain, forcing many steel buyers to look for material abroad. That would expose them to fluctuations in currency exchange rates and higher transportation costs, the newspaper said.
Tata’s U.K. plants sell half of their products into the domestic market, according to The Times.
Also, a closure of Tata Steel’s plants could cost the public an estimated GBP 4.6 billion over the next 10 years, according to an analysis by the Institute for Public Policy Research, a progressive U.K. think tank.
According to the institute, those costs would come in the form of lost tax revenue and additional payments under social benefit programs. Its estimate is based on an assumption of 40,000 jobs being lost at Tata and its suppliers.
"The effects of plant closures on the UK could be very serious indeed. Our new analysis shows that there is significant fiscal and economic cost to inaction, which the government must take account of when considering its options for Tata Steel," institute research fellow Alfie Stirling said in a statement.
On Twitter, Javid said he would do all that he could to secure a long-term future for the business.
Although Tata won’t start the formal sales process Monday -- one potential buyer has already emerged -- Sanjeev Gupta, founder of metals trading firm Liberty House.
Liberty House already has a deal to buy Tata’s two affiliated plate mills in Scotland. And according to The (London) Telegraph newspaper, Gupta is interested in Tata’s other assets. However, he has said the U.K.’s high power costs would have to be “rectified” before he’d sign a deal.
Javid's Tweets followed meetings in India with Tata Steel leaders about the company’s planned retreat from the U.K. Javid wrote on Twitter that the meetings were “constructive and positive.”
Last week, Tata announced that it was giving up on its U.K. business and would look to divest it as a whole or in parts, saying that it saw no feasible path toward profitability. Its U.K. business includes the integrated Port Talbot Works, the U.K.’s largest steelmaking facility.
The move leaves the future of steelmaking in the U.K. -- and the thousands of jobs it supports -- in question.
There have been calls to temporarily nationalize the business to ensure it is preserved for any potential buyers. However, U.K.
Prime Minister David Cameron has said nationalization is “not the right answer.”
But allowing the plants to close doesn’t seem to be, either.
The (India) Economic Times reported that closure of Tata Steel’s operations would create a significant hole in the U.K. supply chain, forcing many steel buyers to look for material abroad. That would expose them to fluctuations in currency exchange rates and higher transportation costs, the newspaper said.
Tata’s U.K. plants sell half of their products into the domestic market, according to The Times.
Also, a closure of Tata Steel’s plants could cost the public an estimated GBP 4.6 billion over the next 10 years, according to an analysis by the Institute for Public Policy Research, a progressive U.K. think tank.
According to the institute, those costs would come in the form of lost tax revenue and additional payments under social benefit programs. Its estimate is based on an assumption of 40,000 jobs being lost at Tata and its suppliers.
"The effects of plant closures on the UK could be very serious indeed. Our new analysis shows that there is significant fiscal and economic cost to inaction, which the government must take account of when considering its options for Tata Steel," institute research fellow Alfie Stirling said in a statement.
On Twitter, Javid said he would do all that he could to secure a long-term future for the business.
Although Tata won’t start the formal sales process Monday -- one potential buyer has already emerged -- Sanjeev Gupta, founder of metals trading firm Liberty House.
Liberty House already has a deal to buy Tata’s two affiliated plate mills in Scotland. And according to The (London) Telegraph newspaper, Gupta is interested in Tata’s other assets. However, he has said the U.K.’s high power costs would have to be “rectified” before he’d sign a deal.
