Port Talbot: Tata in talks with Thyssenkrupp to save threatened Welsh steel works

Port Talbot is the UK’s biggest steelworks, employing 4,000 workers.

Tata Steel stressed that the talks with Thyssenkrupp over a joint venture are at a ‘preliminary stage’

(Reuters)

Tata Steel is in talks with its German rival Thyssenkrupp over a joint venture which would include the Indian steel giant’s ailing Port Talbot works.

Tata announced in March that it intended to sell its UK business, including Port Talbot, putting thousands of jobs at risk.

But on Friday evening Tata released a statement saying that it would “look at alternative and more sustainable solutions” for its assets than a sale.

There have been suggestions that a recent recovery in the global steel price has changed the outlook of the Tata board.

“Tata Steel has now entered into discussions with strategic players in the steel industry, including Thyssenkrupp. Discussions have been initiated to explore the feasibility of strategic collaborations through a potential joint venture,” the group said in a statement.

But Tata stressed that the talks are only at a “preliminary stage” and that a transaction might not ultimately be concluded.

“It is too early to give any assurances about the success of these talks,” said Koushik Chatterjee, Tata Steel’s executive director for Europe.

“Such success, especially the inclusion of the UK business in the potential joint venture, would depend on several issues including finding a suitable outcome for the British Steel Pension Scheme, successful discussions with the UK trade unions and the delivery of policy initiatives and other support from the governments of the UK and Wales. These are necessary for realising a sustainable business in the UK.”

In March, Tata took ministers and steelworkers by surprise when the group announced it was pursuing a full sale of its UK assets, citing high manufuacturing costs, competition from China and a global oversupply of steel.

Port Talbot is the UK’s biggest steelworks, employing 4,000 workers.

In recent months the Government has floated the prospect of taking an equity stake in the Port Talbot steel works in order to prevent a closure of the plant and ministers have also been looking at special legislation to lower the pension benefits of Tata workers in order to ease a potential sale.

The Business Secretary, Sajid Javid, has been in India for meetings with Tata’s board.

Hans Fischer, the chief executive officer of Tata Steel Europe, said: “This is a welcome development, not just for Tata Steel but also for the European steel sector more broadly. Although there’s much work still to be done on any strategic collaboration I’m confident that the direction is the right one – towards higher performance and capability to serve customers.”

He added: “We will continue to communicate with our employees and inform and consult both works councils and trade unions as these discussions develop.”

Mr Chatterjee said the sale of Tata's speciality steels business in Yorkshire would continue, saying it had already received interest from several bidders.