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'All options' considered for Port Talbot

BBC News BBC News 30/03/2016
Port Talbot plant © AFP Port Talbot plant

The government is considering "all options" for Tata's Port Talbot steel plant, UK Business Minister Anna Soubry has told the BBC.

Port Talbot © Getty Images Port Talbot

She wants the company to take enough time to find a buyer for the plant. Failing that, other options being considered include government support.

Chart showing steel production in the UK © BBC Chart showing steel production in the UK

But she stressed that the UK had to work within EU rules over state aid.

Map © BBC Map

Tata Steel said it could not give an "open ended" commitment to keep the UK plants open while a buyer was sought.

Late on Tuesday, after a board meeting in Mumbai, Tata Steel said it planned to sell the UK steel business, putting thousands of jobs at risk.

Tata's Port Talbot site, which employs 5,500 of Tata UK's current 15,000-strong UK workforce, is thought to be losing £1m a day.

The Welsh Assembly has been recalled to discuss the crisis, and Labour leader Jeremy Corbyn has called for Parliament to be recalled.

Business Secretary Sajid Javid is returning early from what was planned to be a three-day visit to Australia to lead the government's response.

He said the UK steel industry was vital to the country, but added that he did not think that nationalisation was the answer.

But he repeated that the government was determined to try to keep Port Talbot in business: "There are buyers out there. It might require some sort of government support and we are ready to look at all options."

Pressed as to what there could be by way of government support, Mr Javid said it was "too early to tell what options exactly are on the table, we need to speak to potential buyers".

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Steel 'burden'

Koushik Chatterjee, a group executive director of Tata Steel, told the BBC, the company wanted to move quickly to secure that sale.

He said Tata must cut its losses in the UK, where it had lost £2bn in five years, and the sale price was not the most important issue: "It [Tata's UK steel business] has become quite a burden for the company. It is not a valuation exercise, it is an exposure exercise.

"The view the board took finally was we can't sustain this kind of exposure. So it's not about the bid being low or high. It's about some one being willing to buy the business."

Tata's European holding company has been told to "explore all options for restructuring" the UK steel business.

The decision, which was announced after a board meeting in Mumbai on Tuesday, also affects workers at its other UK plants, including Rotherham, Corby and Shotton. There has been no specific mention of these plants from the government.

Tata's Scunthorpe plant is in the process of being bought, and last week a deal was agreed to sell its two plants in Scotland.

One option for Port Talbot, which is the UK's biggest steel plant, would be a management buy-out.

Sources say that unions and management at Tata Steel have already come up with with a turnaround plan for the 100-year old plant.

Analysis: Kamal Ahmed, BBC economics editor

What China does in steel exports is vital to the UK steel industry - especially "long products", the lower technology steel output that is used by the car industry, building sector and transport.

For some perspective, in 2013 China produced nearly 800 million tonnes of steel.

The UK produced 12 million tonnes - and steel production now makes up just 1% of Britain's manufacturing output and 0.1% of all the UK's economic output.

The value of the industry to the UK economy has fallen by a quarter since 1990.

If China sneezes in steel, the UK does not so much catch a cold as pneumonia.

Read Kamal's blog in full

State aid

Ministers are concerned Tata could seek to close the plant within weeks if a buyer is not found.

It is understood the government is looking at offering loan guarantees to potential buyers and much tighter rules on procurement to ensure major British projects are obliged to buy British Steel.

When asked on the BBC's Today programme whether the government would be prepared to nationalise Tata's remaining steel plants, Ms Soubry said: "We are, and have, and continue to look at, all options and I do mean all options."

However, when pressed, she said there was a limit to what the government could do: "We have to be very careful because we have these state aid rules, which have been established for well over 50 years."

She said there was sympathy for Tata which had invested an "extraordinary" amount in its UK steel operations.

Roy Rickhuss, general secretary of the trade union Community, who met representatives from Tata in Mumbai on Tuesday said: "We will not let the steel industry in the UK die. We are not going silently into the night."

Explaining its decision sell the UK business, Tata said trading conditions had "rapidly deteriorated" in the UK and Europe due to a global oversupply of steel, cheap steel imports, high costs and currency volatility.

"These factors are likely to continue into the future and have significantly impacted the long-term competitive position of the UK operation," it said.

Demand 'falling'

Colin Hamilton, commodities expert at Macquarie Group, told the BBC that it was unlikely Tata would find a buyer for the whole UK steel business.

"Steel demand is still falling. It peaked in 2013. It is very hard to see who would buy the 'hot end' of the business - the steel making end itself - although the rolling mills are more attractive," he said.

Tata Steel has been operating in the UK since 2007 when it bought Anglo-Dutch steelmaker Corus.

In January the company announced more than 1,000 UK job cuts, including 750 in Port Talbot, where it employs 4,000 staff and a further 3,000 contractors and temporary workers.

And last October Tata Steel said nearly 1,200 jobs would go at plants in Scunthorpe and Lanarkshire.

Do you work at the Port Talbot steel plant? How will the plans to sell it affect you and your family? Let us know about your experiences. Email haveyoursay@bbc.co.uk with your stories.

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