Thousands of steelworkers' jobs are one step closer to being saved after steel giant Liberty House (Liberty) entered into exclusive negotiations with Tata Steel.
A letter of intent was signed by Liberty, which is hoping to buy several of Tata Steel's South Yorkshire-based sites. The Indian conglomerate has put a price tag £100m on the assets.
Speciality Steel – which includes steelworks at Rotherham, Stocksbridge and Brinsworth , as well as other operations in Suzhou and Xi'an in China – employs around 1,700 people.
The sale of the sites is "independent" of the wider restructuring of Tata Steel's UK portfolio, according to its chief executive Bimlendra Jha. He added: "This is an important step forward in seeking a future for Speciality Steels."
Tata Steel will now open up its books to Liberty for a detailed financial review. It is hoped this stage of the process will conclude with a binding offer from the company owned by Sanjeev Gupta to buy the business.
Sources close to the deal told City A.M. the diligence process is expected to take six weeks, meaning an offer would be on the table early in January.
The news was welcomed by the main steelworkers trade union, Community.
"After months of uncertainty and delay from Tata, this will be welcome news for the thousands of steelworkers whose jobs depend on the success of this business," said Roy Rickhuss, general secretary of Community.
"This is a positive step for the UK steel industry; however there remain huge challenges which government must address," he added.
One such challenge is what to do with Tata Steel's Port Talbot site – not one of the assets included in today's agreement.
And Tata Steel's Jha showed he had not forgotten about the plight of operations in South Wales, which includes a near-£500m pension black hole.
"We continue to actively seek solutions to the company's structural challenges and work with all stakeholders. Among those challenges, there is the need to develop a more sustainable business in the UK as well as a self-sustaining future for the British Steel Pension Scheme," he said.