Tata Steel looks set to sell its Long Products Europe business and associated distribution activities to Klesch following the signing of a memorandum of understanding between the companies.
The agreement includes a number of UK-based assets including the steelworks at Scunthorpe, mills in Teesside and Scotland, an engineering workshop in Workington and a rail consultancy in York, plus other operations in France and Germany.
Long Products Europe produces standard and differentiated products including sections, rails, wire rods, special profiles and plates for the rail, yellow goods, energy and construction sectors.
With approximately 6,500 employees, the Long Products business produces around three million tonnes and has the capacity to produce up to five million tonnes.
In a statement, Karl Koehler, chief executive of Tata Steel’s European operations, said: ‘We’ve improved the competitiveness of Tata Steel’s European operations, including Long Products Europe which now supplies more of the innovative steel rail, rod, plate, sections and special profile products demanded by customers.
‘Accelerating the pace of innovation on advanced steel solutions, helping our customers succeed in their markets and creating a sustainable asset base requires significant capital and expertise.
‘We have therefore decided to concentrate our resources mainly on our strip products activities, where we have greater cross-European production and technological synergies.
‘We want to build a sustainable business in the UK and further develop our mainland Europe business and we are committed to providing the necessary leadership and financial resources to achieve that.’
Both parties have entered a period of detailed due diligence and expect to complete the transaction in the first half of 2015.
Unions have reacted cautiously to today’s announcement, with Community, Unite and GMB stating: ‘The fact that Tata Steel wants to abandon half of its European operations and pull out of an entire strategic market does not bode well for the future and ends Tata Steel’s vision to be a global steel player.
‘Tata Steel has long emphasised that its European operations are ‘one company’ but today’s announcement is the final nail in that concept’s coffin.
‘We are…calling on the government to intervene in the public interest to ensure a future for industrial assets of strategic importance to the UK’s construction, infrastructure and manufacturing base.’
Tata Steel’s Long Products Europe business is made up of the following facilities:
· Scunthorpe integrated steelworks
· Teesside Beam Mill, Lackenby
· Special Profiles, Skinningrove & Darlington
· Dalzell Plate Mill, Scotland
· Clydebridge, Scotland
· Immingham Bulk Terminal (port terminal)
· Hayange Rail Mill, north east France
· Engineering workshop, Workington
· Rail consultancy, York
Associated distribution sites in the UK and Ireland that are part of the potential sale are located in:
· Scunthorpe (two locations)
· Edinburgh, Scotland
· Mosstodloch, Scotland
· Newton Abbot
· Lisburn, Northern Ireland
· Dublin, Ireland
· Cork, Ireland