Tata Steel explores feasibility of joint venture in preliminary talks
Tata Steel has entered into discussions with strategic players in the steel industry to explore the feasibility of collaborations through a potential joint venture, the company has announced.
The talks are at a preliminary stage and Tata said there can be no certainty of a transaction.
The Community union said the move continued uncertainty for thousands of steelworkers and their families.
Tata said there had been seven expressions of interest in buying its business after it announced in March it was selling its loss making UK assets.
The bids have been fully considered and reviewed in the light of "uncertainties" caused by Brexit.
The board, meeting in Mumbai, said it had decided to look at "alternative and more sustainable" solutions.
Discussions have started with companies including German firm thyssenkrupp to explore a potential joint venture.
Koushik Chatterjee, Tata's group executive director said: "We have initiated conversations for a strategic collaboration for our European business. A potential strategic combination of strip products businesses offers the best prospects to create a premium, world-class strip steel business with the scale and scope of capabilities to compete successfully on the global stage.
"It is too early to give any assurances about the success of these talks.
"Such success, especially the inclusion of the UK business in the potential joint venture, would depend on several issues including finding a suitable outcome for the British Steel Pension Scheme, successful discussions with the UK trade unions and the delivery of policy initiatives and other support from the Governments of the UK and Wales.
"These are necessary for realising a sustainable business in the UK.
"The management team and the employees of the company are also continuing to improve the underlying performance of our European business which is very encouraging.
"We continue to be actively engaged with both the UK and the Welsh Governments, the trade unions and the Pension Trustees."
Mr Chatterjee said Tata will begin separate processes for the potential sale of the South Yorkshire-based Speciality Steels business and the Hartlepool pipe mills (other than the 20-inch Tube Mill) .
Both of these operations are largely independent of the strip products supply chain.
Tata has already received interest from several bidders for Speciality Steels and the pipe mills.
Hans Fischer, chief executive officer of Tata Steel Europe, said : "This is a welcome development, not just for Tata Steel but also for the European steel sector more broadly.
"Although there's much work still to be done on any strategic collaboration I'm confident that the direction is the right one - towards higher performance and capability to serve customers.
"We will continue to communicate with our employees and inform and consult both works councils and trade unions as these discussions develop."
Roy Rickhuss, general secretary of Community, said: "The current status of the sales process is unclear and this will be frustrating for our members, and perhaps even the bidders.
"This new approach means that uncertainty will continue for thousands of steelworkers and their families.
"It seems Tata believe this is in the best interests of sustaining steelmaking in Port Talbot and its downstream operations but the test will come in the next steps that Tata takes and how the dialogue with thyssenkrupp progresses.
"There have been reports of talks between thyssenkrupp and Tata for some time, so now Tata should come clean about their intentions.
"Tata must also recognise the level of frustration, even anger, among the workforce over these delays and uncertainty. It is vital that they work with Community to reassure and protect the greatest asset to the business - its people."
Mr Rickhuss said the announcement brings closer testing the commitments the Government has made to steelworkers in recent months.
"The Government claims that it is business as usual following the shock referendum result, but now they need to prove that is the case by turning their words into action.
"Community has stressed to both government and Tata that finding a solution to the British Steel Pension Scheme has to be a priority. We do not consider the Pension Protection Fund to be an adequate option.
"The Government needs to help calm the fears of thousands of steelworkers in the months ahead.
"Ministers have spoken of continuing steel making in Port Talbot's blast furnaces.
"They have also insisted that a country that manufactures must have a steel industry. Now they must deliver on those promises they have made to steelworkers and their communities."
Business Secretary Sajid Javid said: "The past few months have been a very uncertain time for Tata UK steel workers, particularly at Port Talbot. So Tata's news today that they intend to explore strategic alternatives including a possible joint-venture with thyssenkrupp is encouraging, as is the fact that they have decided to separately sell their speciality steel and pipe businesses in Rotherham, Stocksbridge and Hartlepool. It is imperative that momentum is maintained to provide much needed security for workers and the wider supply chain.
"I met with Tata's global chairman Cyrus Mistry today and underlined that the Government remains committed to doing all it can and that our package of commercial support still stands. We will continue to work closely with Tata to find a long-term solution for sustainable blast furnace steel manufacturing in Port Talbot."
Unite national officer Harish Patel said: "It has been a desperately uncertain time for steelworkers and their families, who will no doubt have many questions about what this announcement means for them and their industry.
"Workers in Tata Steel's strips business which includes Port Talbot will want to know precisely what the steelmaker's long-term plans are, while those in the speciality and tubes division will want the assurance that Tata will sell to a responsible buyer.
"Over the coming days, Unite will be holding Tata to its promise to be a responsible seller and seek to engage positively with prospective buyers of its speciality steel and tubes business.
"Unite will also be pressing Tata Steel for cast iron guarantees over its intentions for Port Talbot and its strips business. The rollercoaster of uncertainty the world class workforce has been on must end.
"With talk of a tie up with thyssenkrupp, this announcement cannot result in the managed decline of Port Talbot while capacity is shipped elsewhere. With the right support and right investment steelmaking in Port Talbot and across Tata's strips business can be profitable and sustainable."
Welsh Secretary Alun Cairns said: "The UK Government is determined to secure a long-term future for steelmaking in South Wales and I am doing everything I can to help the thousands of people who rely on the Port Talbot plant for their livelihoods.
"Today's announcement of a joint venture is encouraging and I will continue working closely with Tata to secure the best possible deal for the hard-working men and women in Wales who help make British steel the best in the world."
Dave Hulse, national officer of the GMB said: "We are pleased that Tata Steel has reaffirmed its commitment to pursuing the best prospects for the steel industry and are continuing to develop a sustainable transformation plan for its UK businesses across all Tata Steel sites.
"The steel unions will continue to hold both the Government and Tata Steel to account over the commitments made by the Prime Minister and his Government both in face-to-face meetings with steel workers and also Tata Steel committing to be a responsible seller."
A spokesman for Liberty House said: "This is sad and frustrating news for the UK steel industry because the sector needs a fresh start and we fear this decision will simply deliver more uncertainty over a longer period.
"From our own point of view it's disappointing that, in the short term, we will not be able to apply our Greensteel strategy on the scale which would have truly evolved and transformed Britain's steel and engineering sector.
"We will continue to pursue our Greensteel vision to deliver an integrated value-added steel business that is both financially strong and built from renewable sources of energy and steel.
"In the short term we will continue discussions with Tata about the acquisition of a number of important assets that fit well with our strategy.
"We would like to thank those who have supported us internally and externally in this long and demanding process and look forward to working with many of them in taking our business forward."
Jon Trickett, shadow business secretary, said: "Today's announcement by Tata Steel does not yet deal with the concerns raised by unions at the Port Talbot works, and local communities potentially affected by plant closures and sales.
"Workers and communities need a cast-iron guarantee that jobs will not be threatened as a result of change of ownership but the prospect of significant cost-saving raises the spectre of further job losses in a vital national industry.
"In addition, the security of the steelworkers' pension fund should not be used as a bargaining chip between competing potential buyers and steelworkers should not be expected to in effect subsidise a sale by taking a cut to their own pension savings.
"It is time for this Government to step up to the mark and put the measures in place needed to sustain a vital industry and the jobs and communities it supports."