Tata Steel is set to sell its UK assets, putting thousands of jobs at risk, after crunch talks held yesterday between the company, politicians and union bosses in Mumbai failed to deliver a different solution.
The company said last night that it had told the board of Tata Steel Europe to "explore all options for portfolio restructuring including the potential divestment of Tata Steel UK, in whole or in parts".
Tata said it had "noted with deep concern the deteriorating financial performance of the UK subsidiary in the last 12 months".
"While the global steel demand, especially in developed markets like Europe has remained muted following the financial crisis of 2008, trading conditions in the UK and Europe have rapidly deteriorated more recently, due to structural factors including global oversupply of steel, significant increase in third country exports into Europe, high manufacturing costs, continued weakness in domestic market demand in steel and a volatile currency," Tata said in a statement.
"These factors are likely to continue into the future and have significantly impacted the long term competitive position of the UK operations in spite of several initiatives undertaken by the management and the workers of the business in recent years."
The group also said "given the severity of the funding requirement in the foreseeable future", Tata Steel Europe will be looking for a feasible option "in a time bound manner".
The decision to sell will affect thousands of jobs in the UK, particularly at Tata's Port Talbot steelworks in Wales, which employs around 4,000 people.
Roy Rickhuss, general secretary of the steelworkers' union Community, who travelled to Mumbai to take part in talks with Tata's board, said it was up to the government now to do all it can to protect the UK steel sector.
"We are disappointed that the future remains uncertain, not just for Welsh steelworkers but for thousands more workers in Tata's businesses elsewhere in the UK," he said. "However, our worst fear that Tata would announce plant closures today has not been realised."
Rickhuss added: "We will of course wait to see the detail of Tata's divestment plans but, as we said before, it is vitally important that Tata is a responsible seller of its businesses and provides sufficient time to find new ownership.
"There is also a crucial role for both the Welsh and UK governments to do all they can to ensure a future for Tata's remaining UK steel businesses and to provide every assistance to secure a buyer that will continue steel making. We don't want just want more warm words, we want a detailed plan of action to find buyers and build confidence in potential investors in UK steel."
Meanwhile, Labour leader Jeremy Corbyn said he was "deeply concerned" by the news, and added: "The government must intervene immediately to protect UK jobs and British manufacturing."
Tata wants to streamline as the industry has struggled recently due to a flood of cheap steel imports from China, as well as high energy costs, high business rates and a strong pound.
Earlier this year, business secretary Sajid Javid rejected calls for higher tariffs on Chinese steel, despite previously signing a letter with his counterparts from France, Italy, Germany, Poland, Belgium and Luxembourg demanding that the European Commission "use every means available and take strong action" in response to "unfair trade practices".
Javid later said that the UK's steel sector should not expect to be bailed out in the same way that banks were after the financial crisis.