The fate of Port Talbot steelworks and thousands of jobs lies in the hands of the government today with investors showing little appetite for buying the UK operations of Tata Steel outright.
Prime Minister David Cameron will chair an emergency meeting of key ministers as Number 10 pledges to “ensure a sustainable future” for the troubled Welsh plant. Tata Steel employs 5,500 in the UK, although the think tank IPPR estimates 40,000 jobs could be lost in UK steelmaking communities if no buyer is found.
It is understood that the government will stop short of full nationalisation with business secretary Sajid Javid, who was forced to fly back from Australia yesterday, saying that state intervention is “rarely the answer”. Other options favoured by ministers include a management buyout, temporary state intervention or a sale.
Commodities investor Liberty House has emerged as the most likely buyer, but said its interest hinged on what Tata and the government would do. It also signalled it could look at the products side of the business, but not the steelmaking facilities themselves, which present a “huge challenge”.
Liberty House’s executive chairman Sanjeev Gupta said: “While the downstream operations will be of interest, we’re clear that taking on the iron and steelmaking facilities present a huge challenge. Our engagement will depend very much on what Tata and the government are prepared to do to help save these businesses."
The operations were put up for sale on Tuesday night when owner Tata Steel, part of the Indian conglomerate, decided it could no longer sustain Britain’s biggest steel manufacturer, which is losing £1m a day.
Tata Steel has written down its UK assets to “almost zero”, with finance director Koushik Chatterjee saying: “We have taken about £2bn of impairment. It is not a valuation exercise, it is a question of reducing an exposure.”
It is thought that other firms which have previously eyed struggling UK steel businesses are highly unlikely to bid. Industry experts have played down the chances of a buyer for Port Talbot being found, though many think parts of the business do have value.
“The writing is on the wall. We might have people come in and pick up bits and pieces that may be profitable but making steel in the UK is never going to be a high margin business,” Colin Richardson, of industry data company Platts told City A.M.
Community, the steelworkers’ union, last night slammed the government for creating what it called “confusion”. It had welcomed business minister Anna Soubry’s remarks that the government would “leave nothing off the table”, but Javid’s comments angered the union.
Labour has not ruled out calling for full nationalisation, but want other measures considered first, including business rates relief energy subsidies.