Tata Steel has not ruled out keeping its UK business, including the Port Talbot steelworks, despite having begun the process of selling it and announcing it wants to pull out of the country.
A source close to the Indian company told The Guardian it was still exploring whether it could afford to keep its UK steel business and fund a turnaround plan, with thousands of jobs on the line as talks continue over a rescue deal.
The news emerged as David Cameron visited the Port Talbot steelworks in Wales on Tuesday to offer his support to Tata employees.
Tata Steel is pressing ahead with plans to sell the business, but that could change if the outlook improves. The government has offered hundreds of millions of pounds to a potential buyer of Tata Steel UK and said it is willing to take an equity stake of up to 25% in the business.
The Tata source said: “When dealing with governments, Tata won’t take things lightly.
“It is currently ‘no’ [it will sell the UK business]. But what happens in a week, two weeks, I don’t know. They are looking at the business plan, bearing in mind steel prices are going up and assuming Chinese dumping can be reduced.
“If they can some way or other bridge the gap they will stay, but at the moment they can’t bridge the gap.”
The government’s commitment to supporting the steel industry has been welcomed by Tata. However, its offer of direct financial support – most likely through low-interest loans – is unlikely to influence any decision by Tata to keep the UK business. This is because Tata has vast financial resources of its own and a string of banks willing to lend money to it.
Tata has contacted almost 200 potential buyers for its UK business, including investment firms and other industrial companies. The most likely saviour to emerge so far is a management buyout backed by the Welsh billionaire Sir Terry Matthews.
The prime minister met managers, union leaders and workers, including the chief executive of Tata Steel Europe, Hans Fischer, and general secretary of the Community union, Roy Rickhuss, in his first visit to the Port Talbot site since the crisis unfolded.
His official spokeswoman said the government wanted to do everything it could to “support a sustainable future for the steel industry”, but said it did not underestimate the scale of the challenge facing the industry.
She said Cameron’s meetings focused on a financial support package for potential buyers, rather than tariffs against Chinese imports, which have been blamed for the pressure on the industry.
“The PM underlined our commitment to working with Tata to support the future of steelmaking in Port Talbot and emphasised the need for the Tata sales process to cover the whole business and for there to be sufficient time for that process to run,” she added.
“The PM has been clear throughout that the government should do all it can to support the sustainable future of steelmaking in Port Talbot.”
Rickhuss said he had asked to meet Cameron in late March, when Tata announced the plan to sell off its UK operations, and welcomed the fact that they had now met. He said Cameron had “looked steelworkers in the eye and promised to do all he could to protect their jobs”.
“The joint announcement by the UK and Welsh governments last week, including the proposal to take up to a 25% stake in the business, was a big step forward and it was good to hear the prime minister reiterate that commitment today,” said Rickhuss.
“David Cameron has now joined the growing list of senior politicians who have visited Port Talbot, but today we made it clear that steelworks throughout England and Wales are also under threat. This is a national industrial crisis and the prime minister needs to act nationally, and indeed globally, to secure a sustainable future for the UK steel industry.”
He said steelworkers would be watching and waiting for Cameron to match words with real action.
Cameron also spoke on the phone to local Labour MP Stephen Kinnock, who warned against the strip products business being divided up, with a buyer taking on all the sites except the biggest plant in south Wales.
“The integrated nature of the Tata Steel UK strip products business must be retained, regardless of ownership. This means that the Port Talbot hub, including its two mighty blast furnaces, must continue to be intrinsically linked to the downstream plants across the UK, from Llanwern, to Trostre, Shotton, Corby and Hartlepool,” said Kinnock.
