MUMBAI/LONDON: India’s Tata Steel Ltd is in talks to sell loss-making European operations including mills in northern England and Scotland to Geneva-based Klesch Group, as it battles weak prices and tentative economic recovery.
Tata, Europe’s second-largest steel producer, said in a statement it had agreed to negotiate with Klesch over its Long Products division, which serves the construction and engineering industries and employs 6,500 people in Britain and Europe.
Tata — which came into the European steel market with the acquisition of Corus in 2007, just before the financial crisis —employs 30,500 people in Europe, including 17,500 in Britain.
Its exit from some of its largest operations in Britain would be another blow to the country’s bruised industrial heartland, even as the UK government seeks to diversify the economy away from financial services.
Karl Koehler, chief executive of Tata Steel’s European operations, said the group would now focus on strip products, a higher-margin category of steel which is used in cars, construction components, white goods and packaging.
“Tata Steel has a strategy of differentiating itself,” Koehler said.
“This is best done by sharpening the focus on the biggest part of our European business, in order to build a sustainable, robust, viable business with improved products and first class manufacturing expertise, therefore achieving a better competitive base,” he said.
Koehler declined to give a value for the potential sale or to disclose losses by the division. But he said the operations being put up for sale were close to breaking even.
Tata, one of the world’s largest steel companies, has an annual crude steel capacity of 29 million tonnes a year. In total, Koehler said the European long products division, which was restructured in 2011 and again last year, produces around 3.2 million tonnes of steel a year.
UK business secretary Vince Cable, pointing to the “harsh reality of trading conditions in parts of the steel industry”, said the government would continue to work closely with Tata and seek to meet Klesch to better understand their plans. Reuters
