Tata Steel’s ongoing talks with the UK government to secure the future of its biggest steel works at Port Talbot include a proposal for the government to inject nearly £900 million and picking up an equity stake in Tata Steel UK.
Tata Steel UK operations include an integrated steel plant at Port Talbot and some other product manufacturing sites including, Shotton, Newport, Hartlepool. Tata Steel Europe operates a large integrated steel plant at IJmuiden in the Netherlands.
UK media reports said on Saturday said that Tata Steel has presented proposals to the UK government in recent weeks aimed at securing a state injection of close to £1bn into its UK operations.
In return, Tata Steel could give equity stake of up to 50% to UK taxpayers – amounting to a semi-nationalisation of Britain’s largest steelmaker, the reports added.
Media reports also indicated that the proposal – one the various options being considered – could involve Tata Steel writing off an equivalent quantity of debt owed to it by the UK business.
The discussions with the UK government involve various options including the possibility of shutting down its blast furnace operations at Port Talbot and switch over to the greener alternative of electric arc furnaces. The move is linked to participation by the UK government to sustain Tata Steel’s operations in the UK in the wake of the Covid pandemic.
A spokesperson for Tata Steel Europe told ET earlier this week the company is in “active discussion with the UK government on several options for the future of Port Talbot operations. This includes, potential co-operation and participation from the Government to create a sustainable decarbonised footprint for the future.”
“Given prevailing market conditions and disruption caused by the COVID-19 pandemic, it is clear that the current Port Talbot operations faces structural challenges that needs to be urgently addressed,” the official added.
However, the discussions are ongoing and are nowhere near to being finalised.
“Discussions with the Government are constructive and ongoing, and at this stage no decisions have been made.
“It would therefore be inappropriate to comment on unsubstantiated speculation about the outcome of these discussions or the potential impact of any changes to secure our sustainable long-term future, the Tata Steel Europe spokesperson added.
The UK government has undertaken ‘Project Birch’ to provide financial assistance to businesses that have suffered in the pandemic. However, it is not clear whether that could potentially involve the UK government coming in as an equity partner to secure the future of any business seeking assistance.