India's Tata Steel is holding talks with Swedish rival SSAB over the possible sale of its Ijmuiden plant in the Netherlands, casting further doubt over the future of the UK's largest steelworks in Port Talbot.
Tata Steel Ijmuiden plant, Netherlands
Tata Steel's facility in IJmuiden, the Netherlands. Photo: Wattman / Flickr
Last Friday, SSAB confirmed the company was in talks with Tata over the "potential acquisition" of its Dutch business in a short press release.
SSAB was keen to emphasise that the talks were one of several different discussions regarding the issue of consolidation of Europe's steel industry and that no decisions had yet been made.
"There can be no certainty that any transaction will materialize, nor as to the terms of any such potential transaction," the company said in the press release.
The Ijmuiden steel plant is one of the largest in Europe, employing 9,000 people together with its related facilities.
Last month, the Dutch public prosecution service, the Openbaar Ministerie, announced it would begin the process of litigation against the Ijmuiden plant over "graphite rains" caused by blast furnaces.
The news comes at a difficult time for the European steel sector, battered and bruised from the effects of the pandemic, and suffering from high imports and excess production capacity.
Several analysts have argued that the steel industry in Europe is in desperate need of consolidation in order to compete with China and to meet the challenges of decarbonisation.
Tata Steel said: “We will undertake a due process and move to the next stages including consultation and due diligence."
The company added that a process was already underway to split the Dutch and British arms of its steel business so they could “pursue separate strategic paths”.
Tata Steel's words will likely ring alarm bells for the 8,000 people working for its UK arm, particularly for those at the Port Talbot steel complex in Wales, which employs half of them.
The British operation has failed to turn a profit for some time now, despite job cuts, restructurings, the closure of several mills and an unsuccessful attempt to put it up for sale in 2016.
Earlier this year, the plant requested millions of pounds in public financial aid as part of the government's furlough scheme in response to the coronavirus pandemic.
Tata also said that it was still in talks with the UK government over the future of its operations in the country.
The potential closure of UK operations could meet fierce resistance, however, with Roy Rickhuss, general secretary of the British steelworkers’ union Community, saying: “Should we conclude the separation of Tata Steel UK would place our members’ livelihoods at risk, then we will vigorously oppose the break-up of the company.”
Tata, which also has interests in such iconic UK brands as Jaguar Land Rover and Tetley Tea, entered the European steel market in 2007 with the acquisition of Anglo-Dutch company Corus for £6.7 billion.
The high price tag came at the commodity boom's peak, quickly turning sour and leading Tata to look for an exit.
Last year, the European Commission put a stop to the proposed merger between Tata and Thyssenkrupp, on competition grounds.
Shares in SSAB dropped by 4% following the announcement.
Back to Homepage
Back to Metals & Mining