Cameron says rescuing Tata's Port Talbot steel plant not easy

[LONDON] Prime Minister David Cameron said it won't be easy to rescue Tata Steel Ltd's Port Talbot plant in South Wales, but the government will do everything it can to ensure Britain retains a steel-making industry.

"It's right to do everything we can to secure the future of these sites," Mr Cameron told reporters in Washington, where he's attending a summit on nuclear safety. "It's a very difficult situation, and people who pretend there's some simple easy answer in a world of massive overproduction and collapsing prices are not playing straight with you."

The crisis comes at a sensitive time for the government, with Welsh Assembly elections a month away and deepening rifts in the ruling Conservative Party ahead of June 23's in-or-out referendum on European Union membership.

Tata Steel, part of India's biggest conglomerate, said late Tuesday it's considering a sale of its loss-making UK steel division, which has been hit by cheap Chinese imports. Mr Cameron said his ministers saved the plant in South Wales from closing, rebuffing accusations that the government was slow to act in a crisis that threatens as many as 40,000 jobs.

"The reason why we're now discussing a sale process is that the government intervened with the company to make sure that a sale was considered, rather than simply outright closure," Mr Cameron said.

Business secretary Sajid Javid, who was on a trade visit to Australia when Tata made its announcement, was forced to cancel the rest of his trip to fly back to Britain to address the crisis. On Friday, he visited the plant at Port Talbot to meet workers and managers.

In a pooled television interview, Mr Javid said the government had been working closely with Tata but dodged questions about why the company's decision appeared to have come as a surprise to him, saying it was "commercially sensitive" information.

"The one thing that was new was talk afterwards about the time frame of the sale; that's what I got concerned about and that's why I rushed back here," Mr Javid said. "I'm confident that we'll see a process that works for everyone." 'Absolutely Vital'

Mr Javid also spoke to workers who had gathered outside the meeting, telling them "we're on your side" and that steel production is "absolutely vital to the future of Britain's industrial sector."

The Institute for Public Policy Research estimates the sale could hit Tata's 15,000-strong UK workforce as well as another 25,000 jobs that depend on the steel plants.

Tata's decision followed several quarters of losses and 2 billion pounds (S$3.8 billion) of writedowns that left the division with an asset value of almost zero. With steel prices at their lowest in a decade, higher UK wages and energy costs left the business exposed in the face of cheap Chinese imports. Mr Cameron raised the issue of dumping with Chinese President Xi Jinping at the meeting in Washington, a British official said.

Campaigners for a "Leave" vote in the referendum said the EU's control of trade policy has left Britain unable to protect its steel industry.

The EU imposed tariffs of as much as 26.2 per cent last month on some steel products from China and Russia for allegedly selling the products at below cost price in the EU, a practice known as dumping. By comparison, the US announced tariffs of 266 per cent on some Chinese steel imports this month.

BLOOMBERG