Tata Steel plans to continue production in UK for at least next decade says Labour Peer

UPDATE: It looks as though the expected Tata Steel announcement stops a little short of outright commitment to it’s wider UK assets.

The company has announced this morning the signing of a Letter of Intent with Liberty House Group to enter into exclusive negotiations for the potential sale of its Speciality Steels business for around £100m.

The Letter of Intent covers 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 in the West Midlands.

Today’s announcement from Tata Steel is “in line with the overall restructuring strategy of the UK portfolio” the company says.

They also say they are pursuing £85m worth of capital investments covering a range of ‘sustenance and improvement schemes’

Tata Steel recently approved schemes focused on improving manufacturing capability to enable the production of premium steels in Shotton, Llanwern, Trostre, Orb in Newport, and other downstream operations as well as environmental schemes for Port Talbot’s power plant.

In a statement on the company’s website Bimlendra Jha, CEO of Tata Steel UK, said:

“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 last 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 £85m 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 Shotton, Llanwern, Trostre, Orb 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 our strategy to enhance our premium product focus for our UK strip products supply chain.

Earlier Report:
Tata’s UK steel operations including their profit making Shotton plant are set to remain under Tata ownership for at least the next decade.

The Guardian newspaper reports Labour Peer Lord Bhattacharyya, one of Tata group’s closest advisers, has told business leaders the Mumbai-headquartered company is preparing to commit to its UK steel operations for at least 10 years with up to £100m a year in investment.

The move would secure the future of more than 11,000 steel workers, over 700 of which work at Tata Shotton.

Lord Bhattacharyya said Tata is preparing “major announcements about growth in Tata Steel”, and is “resolving” the problems facing the business.

The company is halting the sale of its speciality steels arm, which is part of Tata Steel UK and employs about 2,000 people in England.

Bhattacharyya is close advisor to Ratan Tata, the chairman of Tata Group, and advised him on the purchase of Corus steel and is also a member of the panel that will choose Tata’s successor as group chairman.

Hanging In The Balance

The future of Tata Steel UK and its 11,000 workers has been hanging in the balance after the company announced it wanted to dispose of it’s UK steel assets back in March.

The company has been operating with heavy losses in the UK despite the success of the profit making Shotton plant, high energy prices, Chinese steel dumping and demand for steel worldwide not returning to the levels seen before the financial crisis all conspiring to batter the UK steel industry.

Over recent months the tide appears to have turned with Tata’s Port Talbot site returning to profit, in August reports said Tata is to make a £7m investment into it’s Shotton plant with the purchase of the next generation of steel coating equipment.

For Sale

Tata Steel entered a sales process which looked increasing more like a game of poker with the UK Government as they sought concessions on the future of Tata Steel UK’s pension scheme, the British Steel Pension Scheme, which was seen major sticking point in any potential sale.

With liabilities of £15bn and 130,000 members, the pension fund is one of the biggest retirement schemes in the UK.

Tata announced in June that it was entering discussions with the German steel producer Thyssen‎-Krupp about a joint venture.

Talks with ThyssenKrupp are continuing however, It’s believed Tata is willing to commit to its UK sites if a deal goes ahead or not.

Bhattacharyya who was talking at a meeting of political and automotive leaders from the Midlands on Thursday evening said:

“Of course we went through some problems as you have read in the press in the last few months but we are now resolving it and we are working with everybody, with the workers, local authorities and government, in order to make sure that Tata produces steel here for the next 10 years at least. We will do that.”

Lord Bhattacharyya also said: “We have been going through some problems of course, temporary problems, but nevertheless I think we are on the verge of solving it. We will work with Jaguar Land Rover to introduce thin steels for the new generation of cars.”