Forgemasters resurrects plan to build £140m press

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The Independent Online

Engineer Sheffield Forgemasters has launched a review over whether to resurrect plans to build a 15,000-ton steel press, a project axed in the early days of the coalition government.

The firm had been promised an £80m loan by Labour, which believed that the project was vital to help Britain take a leading share of the burgeoning market for nuclear forgings. The loan was said to be vital to bridge a huge funding gap for the £140m press as Forgemasters argued that private-sector finance was not readily available.

However, the coalition decided to withdraw the loan as one of its first major statements of intent on spending cuts. The move was controversial as there were claims that it would cost jobs and mean that Britain would lose this market to Asian competitors.

A Forgemasters director, Peter Birtles, said that the review started two weeks ago and could take up to three months to complete. "We are updating all the numbers and data," he said. "There is a firm underlying belief that this project should go ahead for the good of the country and for the good of the company. But it's whether the numbers stack up."

Vince Cable, the Business Secretary, agreed to reconsider the proposal if Forgemasters looked again at its plans in the first half of this year. Should the company and its advisers, which include PricewaterhouseCoopers, decide that the project is still financially viable they will then consider funding options. These could include project finance, selling a stake in the business to a private sector partner, or approaching the government again.

Mr Birtles, who is leading the review beside the chief executive, Graham Honeyman, and the chairman, Tony Pedder, said that he would talk to Dr Cable once the review was completed. "We have a fairly open dialogue with the business department and a clear understanding [with Dr Cable]," he said.

The news that the press could still be built will be a boon to the Deputy Prime Minister and Lib Dem leader, Nick Clegg, whose party's spring conference is in Sheffield this weekend. There is unrest among members over the party's role in the coalition, as they believe their ministers have been weak over banker bonuses and student tuition fees. Mr Clegg suffered from the original decision last year as his constituency is in Sheffield.