Sunday 3 April 2016 8:29 pm

Talks to save Port Talbot steelworks rest on carbon tax deal, as Liberty House boss meets with government ministers and Tata executives

A deal to save the Port Talbot steelworks will hinge on reforms to carbon tax rates, potential bidder Liberty House has warned.

The founder of the metals group and commodities trader, Sanjeev Gupta, flew back to the UK today to meet with government ministers and current owners Tata to discuss potential plans for the site.

Liberty House told City A.M. that it has concocted a business model for Port Talbot that involves converting its blast furnaces from production to melting down scrap steel.

Read more: The government must save the people, but not the industry

The plan is dependent on the extent of the investment Liberty House would be expected to commit to, how much the government and Tata would put in, and whether a deal can be reached on the carbon tax.

“German and Italian producers are not subject to the same carbon tax giving them an unfair advantage and that discussion will need to be had,” a spokesperson for Liberty House told City A.M.

The spokesperson warned the discussions were still at an early stage and were unlikely to be completed this week.

Read more: Four things that could happen to Tata steelworks next

Indian steel conglomerate Tata last week announced it would shutter its loss making UK business if no buyer could be found. Tata employs around 15,000 workers in the UK, and it’s thought up to 25,000 jobs in the supply chain could be affected if steel production in the UK was halted.

Tata estimates it’s currently losing more than £1m a day from its UK operations.

There have been calls for the business to be nationalised though business secretary Sajid Javid yesterday played down the possibility. Javid said that while nationalisation was not the preferred option, “nothing” had been ruled out.

It will raise hopes at Port Talbot and elsewhere that the government may be prepared to step in.

“I don't think nationalisation is a solution to this. Having said that, I also think it wouldn't be prudent to rule anything out at this stage, but I think that nationalisation is rarely an answer in these situations,” Javid told the BBC’s Andrew Marr Show.

The government has faced criticism for being slow to act over the steel crisis, which has been blamed on an influx of cheap Chinese steel, following demand in the country faulting.