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Tata enters talks to sell Long Products Europe

22 Dec 2015 17:13 GMT
Tata enters talks to sell Long Products Europe

London, 22 December (Argus) — Indian steelmaker Tata Steel has entered negotiations to sell its Long Products Europe division to investment firm Greybull Capital.

The negotiations concern Tata Steel's UK-based assets, including the entire Scunthorpe steelworks, steel mills in Teesside, an engineering workshop in Workington, a design consultancy in York, various distribution facilities, as well as the Dalzell and Clydebridge plate rolling facilities in Scotland, which were mothballed in October. The assets also include steel mills in northern France.

Tata Steel's Long Products Europe started restructuring the business in a bid "to give it the best chance of survival in the fiercely competitive global marketplace", and return it to profitability, it said in October.

Mothballed plate mills at Scunthorpe, Dalzell and Clydebridge have a combined production capacity of 1mn t/yr. The Dawes Lane coke oven, which is one of two coke ovens serving the Scunthorpe steelworks with total capacity of over 1mn t/yr, was also mothballed, in response to "extremely challenging market conditions".

The UK steel market has experienced an influx of cheaper imports over the course of the last few years, particularly from China and the former Soviet Union. Flat and long-rolled products markets face unfair competition, according to European steel producers, which has led them to request intervention by the European Commission. As a result, the commission has initiated several anti-dumping investigations, particularly into imports of reinforcement bar from China and cold-rolled coil imports from China and Russia.

UK steelmakers' high electricity costs, combined with a stronger pound sterling, have also undermined the competitiveness of their exports and encouraged imports.

UK finance minister George Osborne's autumn budget in November stated energy-intensive industries, including the steel sector, will no longer be subject to additional environmental taxes, after the government faced mounting pressure to improve UK steelmakers' competitiveness.

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