The business secretary will hold talks with Cyrus Mistry, the chairman of Tata, after a day of crunch meetings in the UK. The talks ended with unions calling for Javid to ensure the Indian company does all it can to find a saviour for its UK sites.
About 40,000 jobs are at risk after Tata announced last week it would sell its UK steel business, including the blast furnaces at Port Talbot, the biggest steelworks in the country.
Javid held talks about a potential rescue deal for Tata’s UK sites with Sanjeev Gupta, who runs the metals group Liberty House. He has become the most high-profile candidate to potentially buy the business after conducting a series of television and radio interviews.
Gupta’s plan is thought to involve replacing the blast furnaces at Port Talbot with electric arc furnaces that process scrap steel. However, this could take years and Gupta has indicated he would need significant financial support, with the government helping with Tata’s pension liabilities of almost £15bn and either cutting environmental taxes or subsidising power projects the tycoon is involved with.
The government and unions have already indicated they would like to preserve the blast furnaces at Port Talbot, which make raw steel.
Tata sources cast doubt about the prospect of Gupta being able to rescue its UK sites. They cautioned that the prospect of any rescue deal is “slim”. Tata is keen to sell the business to one buyer, rather than breaking up the business, one source said.
A buyer for the entire business is likely to require “mega bucks” from the government to make Port Talbot viable, the source added. “They want to package the whole thing. They don’t want to upset the unions,” they said.
Other parties are interested in rescuing the business. These include Greybull, the investment firm, and ThyssenKrupp, the German industrial conglomerate.
Speaking after his meeting with Javid, Gupta said: “I am pleased to report that we had a positive meeting today. UK government appears highly supportive and is proactively engaged in finding a long-term solution.
“The next step is for Tata to define the formal sales process and request indications of interest from potential buyers. We await further details on this and then will assess our own next step.”
Gupta has pledged to avoid widespread job losses if he manages to buy the business.
Trade unions have welcomed Gupta’s interest but said it is too early to judge the merits of potential bidders. Union leaders met with Javid after he spoke to Liberty, when they urged him to secure guarantees from Mistry in Mumbai and also warned against a breakup of the business.
Tony Burke, assistant general secretary at Unite, said it had been a “positive meeting”. He added: “The unions made clear that we want him to go to India and make it clear that we need time to put together a deal. We are looking for the whole of Tata to be purchased by one buyer. We are against a breakup.”
Javid confirmed that Liberty is not the only company to show interest. “It’s great that this interest is out there,” he said.
Jones said his message to Cameron during the meeting, which was also attended by George Osborne, had been: “These plants cannot close.”
He told the Guardian that pulling out of the European Union would result in high tariffs on British steel and would “further undermine” the country’s steel industry. He said that in their talks Cameron had told him that the government was prepared to step in to help the sale of Tata’s assets.
Jones said the prime minister “recognised that work needs to be done on pension liability, on increasing tariffs and high energy prices”. He also said ministers had admitted that losing the steel industry would be a security threat because of the need to produce equipment for the military.
“There will need to be action from the UK government in order to make a sale more attractive. We were surprised by the timescale of weeks,” added Jones. “Tata have confirmed that all their assets will be in a saleable position. I don’t think they will want to surrender that reputation for corporate social responsibility.”
On Europe, he added: “What we do know is that if we weren’t in the EU we’d have enormous tariffs on British steel. We wouldn’t be able to compete with steel producers outside Europe. If there were any barriers to that market [it would] undermine the steel industry further.”
It would be “financially daft” to pull out of the EU and expect it to help the industry, Jones said.
The Welsh first minister insisted that the steel market would improve and get back on track for British companies, saying they needed to just “get over this difficult” period.
The comments were echoed by Luis Sanz, the head of Celsa, the second largest steel company in Britain, who said the Chinese were trying to dominate the industry for decades. He warned the UK would not be able to rebuild its capability in the industry if sites were lost.
“It is true that there is an imbalance between steel production and demand at the moment, but it will come to an equilibrium and then whoever holds the production of steel will control the process,” Celsa said.
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