Tata Steel UK has announced 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 an enterprise value of £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 UK, and in Suzhou and Xi’an, China. Speciality Steels employs about 1,700 people, who make steels for the aerospace, automotive and the oil and gas industries.
Bimlendra Jha, CEO of Tata Steel UK, said: “The Speciality Steels business is independent of the pan-European strip products supply chain and today’s announcement is in line with the overall restructuring strategy of the UK portfolio. This is an important step forward in seeking a future for Speciality Steels and we have reached this stage thanks to the efforts of employees, trade unions and management.
“We now look forward to working with Liberty on the due diligence and other work streams so that the sale can be successfully concluded. We will continue to work closely with trade unions and will communicate any material news on this issue to the employees on an ongoing basis.
Mr Jha added: “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.
Responding to the announcement, Wentworth and Dearne MP John Healey said: “This is good news for steel-workers and their families who have been waiting for months to hear from Tata on the sale of Speciality Steels. The company has changed its mind and dragged its feet since the shock announcement in March that it wanted to sell-off its UK steel-making.
“Now at least we know that Tata is serious about selling South Yorkshire’s Specialty Steels, and we know that Liberty is the one serious buyer.
“This is one step closer to ending the limbo that the Tata business is in. The priority now is to test Liberty’s plans for their commitment to the investment, jobs and marketing that can continue Specialty Steel’s success for the long-term. Unions, customers, suppliers and public agencies across South Yorkshire all rightly want this reassurance, and it’s vital this is completed within weeks to lift the gloom from our Rotherham and Stocksbridge steel plants.
“Government ministers must still do some of the heavy lifting to help safeguard steel-making in South Yorkshire. The Chancellor, Philip Hammond, must now confirm a general commitment to post-Brexit industrial intervention and make good on Ministers’ commitments on energy costs, procurement, business rates reductions and funding for skills and R&D. This would be widely welcomed as a signal to the world that UK steel has a strong long-term future.
“Confirmation of its preferred purchaser is an encouraging step from Tata, and now the unions and local South Yorkshire agencies must be able to assess the plans, then start to work with the potential new owner to ensure success. This would be widely welcomed as a signal to the world that UK steel has a strong future, whatever the economic uncertainties that Brexit brings.
“Earlier this month Liberty reopened a steel plant in Wales, and I hope today’s announcement for South Yorkshire is another step towards securing a long-term future for British steel-making.”