Engineering news
Tata Steel UK has signed a Letter of Intent to enter into negotiations for the potential sale of its Speciality Steels business for £100 million to Liberty House Group, subject to due diligence and corporate approvals.
The deal will include several South Yorkshire-based assets including the Rotherham electric arc steelworks, the steel purifying facility in Stocksbridge and a mill in Brinsworth as well as service centres in Bolton and Wednesbury, UK, and in Suzhou and Xi'an, China. Speciality Steels employs about 1,700 people to make steels for the aerospace, automotive and the oil & gas industries.
Bimlendra Jha, chief executive of Tata Steel UK, said: “The Speciality Steels business is independent of the pan-European strip products supply chain and the announcement is in line with the overall restructuring strategy of the UK portfolio. This is an important step forward in seeking a future for Speciality Steels and we have reached this stage thanks to the efforts of employees, trade unions and management. We now look forward to working with Liberty on the due diligence and other work streams so that the sale can be successfully concluded. We will continue to work closely with trade unions and will communicate any material news on this issue to the employees on an ongoing basis.
“We continue to actively seek solutions to the company’s structural challenges and work with all stakeholders. Among those challenges, there is the need to develop a more sustainable business in the UK as well as a self-sustaining future for the British Steel Pension Scheme.”
Tata Steel UK has invested £1.5 billion of capital over the past nine years. The company's boards consider the technical feasibility and economic returns of investments when taking decisions, as well as their affordability. The company is pursuing a transformation plan to create a sustainable future for its UK strip products business. The success of this plan is likely to influence decisions on future investments.
In the current year, the company is pursuing £85 million worth of capital investments covering a range of sustenance and improvement schemes. Tata Steel has recently approved schemes focused on improving manufacturing capability to enable the production of premium steels in Newport, and other downstream operations, as well as environmental schemes for Port Talbot's power plant. Investments in packaging steels, electrical steels, an automotive finishing line, laser welding and next-generation coated products are in line with the company strategy to enhance premium product focus for its UK strip products supply chain.
Roy Rickhuss, general secretary of the trade union Community, said: “Community has spent months campaigning to save these jobs and this news is a credit to our local representatives who have worked so hard to ensure the business has a viable future. We will now begin the process of working closely with Liberty to examine their plans to make a success of Speciality Steels.
“The number one priority for Community will be ensuring that Liberty have a proper plan to protect jobs and provide the long term investment necessary to grow the business. Crucial to this plan will be ensuring that the business’ loyal workforce have a pension plan that provides dignity and security in retirement.”
The news comes after reports that Tata Steels was preparing to commit to keeping its UK operations running for at least a decade.