Thousands of UK steel workers’ jobs could be at risk after Tata Steel admitted yesterday it is in talks to sell one of its British divisions to a billionaire US commodities trader.
The Swiss-based Klesch Group, run by Gary Klesch, has signed a memorandum of understanding with Tata Steel to buy its Long Products Europe. The business, which employs 6,500 staff, owns steelworks at Scunthorpe, mills in Teesside and Scotland, an engineering workshop in Workington and a rail consultancy in York, as well as other operations across France and Germany.
The sudden news of the deal yesterday – which if it comes off will complete next year – has angered unions and fuelled fears about the staff’s future.
A statement from unions Community, Unite and GMB said: “Tata Steel has failed to consult at all with the trade unions before making this move. “We were made aware of this fait accompli two days ago, which is neither within the spirit nor the letter of longstanding Information and Consultation or European Works Council agreements.”
A spokesman for Klesch said the group will now engage with all stakeholders including unions and government.
Vince Cable, the Business Secretary, said: “The next few months will be a time of uncertainty for the company and employees. The proposed sale shows the harsh reality of trading conditions in parts of the steel industry.”
The steel business is still in recovery mode; earlier this year Tata announced 400 job- losses at its Port Talbot plant. But Mr Cable said he had met the global head of Tata in India this week who had “personally re-affirmed to me his company’s commitment to the British steel industry and to investing substantially in Port Talbot and strip steel”.
Tata will now focus on its stripped products and speciality steel.
Klesch has been eyeing the UK’s industrial sector for some time and two years ago bid for the troubled Coryton oil refinery. The deal didn’t happen but earlier this year Klesch bought an oil refinery in Milford Haven, Wales from Murco Petroleum.
The commodities giant has three divisions specialising in the production and trading of chemicals, metals and oil. The group is focused on trading rather than production, unlike Tata’s steel business. Steel has been a focus for the group recently and earlier this month it got the go-ahead for its purchase of Italian steel producer Leali Group.
Mr Klesch made his fortune in the 1980s and 90s as a trader, buying up debt from struggling firms such as Eurotunnel and the property group Heron International. He founded the group, which has revenues of more than $5bn (£3bn) and employs more than 4,500 people, in 1990.
His track record in the UK hasn’t always been smooth. He tried – and failed – to break up Financial Times-owner Pearson. He also bought lingerie chain Knickerbox but it went into administration and was subsequently bought by Ann Summers.Reuse content