Tata could commit to the future of the embattled Port Talbot steelworks within weeks

 
Mark Sands
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Tata has been in talks with ThyssenKrupp over a joint venture since July. (Source: Getty)

Tata is expected to commit to the future of embattled steelworks in Port Talbot within weeks, with hopes rising of a flush of investment for the site.

The Indian conglomerate has been considering the future of the British steel operation for most of 2016, with a mooted joint-venture with ThyssenKrupp under exploration since July.

But now, a Whitehall source close to the business has told City A.M. that the long-awaited verdict could finally be imminent, regardless of progress on talks with the German firm.

"We have been told to expect that at some point in the next month they will announce that they are going to retain strip products and Port Talbot," they said, adding it is increasingly likely that Tata will back the sector even without striking a deal with Thyssenkrupp.

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Any decision to retain the plants would likely include substantial new investment from Tata. The Port Talbot steelworks are in need of modernisation, with one of the site's two blast furnaces in need of relining.

That work alone would likely require more than £100m of rapid investment from the Indian giant.

However, a spokesman for steelworkers union Community also noted that Tata is yet to find a resolution on the yawning deficit in the British Steel Pensions Scheme, previously considered an obstacle to any progress.

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"New investment is undoubtedly necessary, but the issue of the pension scheme remains separate, and it is misleading to suggest that future investment depends on the scheme closing," a Community spokesman said.

"Tata must work with the unions to ensure the industry has future and that our members are protected in retirement. The steel industry's most valuable asset is its highly skilled, loyal workforce – they will be the foundation on which any future success will be built."

A Tata spokesman said: "Back in July we said we had initiated discussions, including with ThyssenKrupp, to explore the feasibility of strategic collaborations through a potential joint venture involving our European business.

"That process is continuing as we continue to believe that a potential strategic combination of strip products businesses offers the best prospects to create a premium, world-class strip steel business with the scale and scope of capabilities to compete successfully on the global stage."

A spokesman for the department of Business, Energy and Industrial Strategy said: "We remain in close contact with Tata and the unions and are monitoring the situation."

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