Tata Steel spins out long products into standalone unit

Tata Steel, which had a back-up plan in place recommended by the trade union, has parked the long products business into a separate company that will help the unit get government funds and protect jobs.

The withdrawal comes after 11 months of negotiations between the two parties, leaving Tata Steel with no option but to continue with the struggling long products business, which employs 6,500 people in Europe.

Unions that campaigned for the move, after Tata Steel announced its intention to sell off its LPE business, have welcomed the announcement.

The news came as it emerged that Anglo-American industrialist Gary Klesch has abandoned his plans to buy the LPE plant, citing rising energy costs and Chinese imports as ruining the UK steel industry.

Long products are used in construction, railways, shipbuilding and engineering. Several analysts saw a sale for the long steel division as a key development for any significant turnaround for Tata Steel’s European operations. “It will also enable strategic options to be progressed”, a Tata Steel spokesperson said.

“The new Scunthorpe-based business will be led by Bimlendra Jha, executive chairman of its board”.

Tata is second in the European steel sector in terms of volume behind ArcelorMittal, also the world’s biggest.

The Swiss-based Klesch Group has been in talks with Tata Steel for more than a year to buy Tata’s steel business making rails and plates.

It is clear that further support from government is needed so the UK steel industry can be competitive in a global market.

“Having worked closely with Jon Bolton over a number of years, we wish him all the best as he leaves the business”. The losses are not connected to an earlier decision to cut hundreds of jobs at the company’s Rotherham site, the company has claimed.