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Cameron says Tata Steel UK gets "encouraging" offers

Thursday, May 26, 2016 - 07:15
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Tata Steel has received a number of serious offers for its businesses in Britain, Prime Minister David Cameron said on Wednesday as steel workers marched past Downing Street to put pressure on the government to get a deal.

[LONDON] Tata Steel has received a number of serious offers for its businesses in Britain, Prime Minister David Cameron said on Wednesday as steel workers marched past Downing Street to put pressure on the government to get a deal.

Britain's steel industry has been hit by cheap Chinese imports, high energy costs and a global supply glut. In March, Tata said it wanted to sell its loss-making operation in the country, putting 15,000 jobs at risk.

Tata's decision has turned the spotlight on the global steel market and the impact of Chinese exports that could lead to protectionist trade policies.

The British government is keen to avoid job losses just weeks before a referendum on membership of the European Union and has offered financial support to help find a new buyer for Tata's steel businesses.

"We continue to work towards trying to get a good outcome for Tata in south Wales, the sales process is under way, there has been an encouraging number of serious offers coming through," Mr Cameron said on a flight to Japan for a G7 meeting.

A Tata Steel executive said the company was in the process of evaluating bids for its British assets.

Britain's steel industry is not alone in facing tough market conditions, with producers across Europe and the United States also struggling.

Earlier on Wednesday, 12 global steel associations urged the G7 to prevent cheap Chinese steel distorting world markets and inflicting further pain on producers.

Tata steel workers highlighted their plight with their protest march on Wednesday past Downing Street and Britain's parliament. "It's not just about steel, we have to secure the manufacturing base in the UK," steel worker Ian Williams, 32, from Tata's Port Talbot plant in south Wales, told Reuters.

"What we want is for Tata to be a responsible seller but also find the right buyer. What they will have in return is one of the best, most committed workforces in the UK."

Sources told Reuters on Tuesday at least four individual bids had been submitted, from management buyout vehicle Excalibur Steel, Sanjeev Gupta's Liberty House metals group, India's JSW Steel Ltd and Greybull Capital. Tata did not comment on the bidding process.

Mr Cameron said: "We have just got to stick at it and do everything we can to try to bring this to a successful conclusion. As I have always said, there are no guarantees, we can't guarantee this is going to work but we are doing everything we can."

Government officials said they were confident the offer of state support would be enough to secure a sale.

Business Secretary Sajid Javid held talks with Tata chairman Cyrus Mistry in Mumbai ahead of the company's board meeting later on Wednesday, which is expected to produce a shortlist from among the bidders.

"(Javid) is really encouraged by all the proposals that were submitted. I would describe it as a productive meeting," a government source said. Mr Javid has spoken to each of the bidders.

As well as poring over the details of the bids, the two hour talks focused on the government's willingness to back the sale with hundreds of millions of pounds of support.

The government has said such support is likely to take the form of loans on commercial terms, and could see the government take an equity stake of up to 25 per cent.

Any announcement on which bids Tata is looking to pursue could come later this week. The government does not have an official preferred bidder in the process.

One of the major hurdles that Britain is looking to remove from the sales process is a £485 million (S$983 million) pensions deficit, although the government said it could not yet comment on exactly how it planned to mitigate that liability.

REUTERS