Britain’s steel industry is on the cusp of extinction but it looks like the sector is finally being reined back from the brink of destruction.
Tata Steel isputting its entire UK business up for sale and over 14,000 jobs in Britain are at risk. This is because Britain’s steel is too expensive to produce. There is too much of it and no one wants to buy it.
However, according to the BBC, it looks like Tata is set to announce some much needed respite on Monday.
Tata Steel will confirm a deal with financiers Greybull Capital, the BBC reports.
Greybull Capital is a family office that makes long term investments in private companies.
The deal will include a £400 million investment package into its Scunthorpe steel plant — which has been up for sale since 2014 — and will secure around 4,800 jobs. Greybull is also reported to be backing a turnaround plan which include a pay cut for staff — although unions will ballot on this.
You can read the BBC’s full report here.
If the deal goes ahead, this will be the latest in a line of deals Tata Steel has secured as it plans to exit the UK steel industry.
Earlier this week, Sanjeev Gupta, founder of commodities group Liberty House, said he is looking at buying the Port Talbot plant in Wales where 4,000 jobs are at risk. Britain’s biggest steelworks Port Talbot is said to be losing around £1 million per day.
He has already saved a Newport steel mill in October and savedalmost 1,000 jobs in the Midlands when the Caparo steel empire went bankrupt. He also has sealed a deal with two of Tata Steel’s sites in Lanarkshire, Scotland.
However, while it looks like Britain’s steel industry is set to be saved, there are a number of concessions to consider.
The government would have to help out with a whole list of concessions for him and Liberty House — which has an annual turnover of $6 billion.
Gupta told the Financial Times that the following needs to happen in order for his company to buy Port Talbot:
- Remove pension liabilities.
- Remove environmental liabilities.
- Lower power costs for steel plants.
His demands aren’t out of this world though — the government has floated these ideas to help find a buyer, last week.