Battling weak prices and depressed market sentiments, Tata Steel on Wednesday said it is in talks with Swiss investment firm Klesch Group to sell a part of its European assets, including mills in northern England and Scotland.
The steel producer said in a statement that it has signed a MoU with Klesch Group to undertake detailed due diligence and negotiations for “potential sale of its long products Europe business and associated distribution activities.” Long steel products are mostly used in construction. The division employees about 6,500 people in Britain and Europe.
According to the MoU with Geneva-headquartered Klesch, Tata will sell UK-based assets including Scunthorpe Steelworks, mills in Teesside, Dalzell and Clydenbridge in Scotland, as well as operations in France and Germany. The company which entered Europe with the acquisition of Corus in 2007, employs 30,500 people in the continent, including over 17,000 in Britain.
Justifying the move, Tata Steel’s chief executive of European operations Karl Koehler said, “We have decided to concentrate our resources mainly on our strip products activities, where we have greater cross-European production and technological synergies. Koehler declined to give a value for the potential sale or to disclose losses by the division. But he said the operations being put up for sale were close to breaking even.
The Indian Express had reported last year that with steel demand being considerably low in Europe, the Eurofer (apex body of the Europe’s steelmakers) have been demanding anti-dumping duties against imports from India.
Though Koehler said that Tata Steel Europe is seeking to build a sustainable business in the UK and further develop its mainland Europe business, steel ministry officials here said that low demand and poor offtake is what could be motivating the company to restructure its operations. This is what motivated Tata Steel Europe to concentrate its resources mainly on strip products activities, where it has greater cross-European production. Tata Steel had in August stated that it was taking steps to restructure operations producing more high-value products and cutting jobs. (With Agencies)