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 After a marathon board meeting in Mumbai, Tata said it would draw a
line under its almost decade-long foray into Britain's steel
industry, exiting the country entirely.
The move could have an impact on Britain's closely fought vote in
three months over whether to stay in the European Union. Britain's
traditionally anti-EU media have blamed Brussels for preventing
London from taking greater steps to protect the industry, although
supporters of membership say EU policy is not responsible for the
industry's plight.
Tata, which employs about 15,000 people in Britain at sites
including the giant Port Talbot plant in Wales, said its financial
performance in Britain had deteriorated sharply in recent months and
it wanted to exit as quickly as possible.
The British government and the Welsh authorities said they were
looking at all viable options to protect the steel industry, which
has already shed thousands of jobs in just the last year.
"We are, and have, and continue to look at all options, and I mean
all options. But what we first want to achieve from Tata is this
period of time to allow a proper sale process," Anna Soubry, a
minister for business, told BBC radio.
She said she could not rule out the possibility of the government
buying the plants until a new owner could be found.
The sale ramps up pressure on Prime Minister David Cameron's
right-leaning Conservative government, which has sought to cultivate
closer ties with China.
Cameron's fate hangs in the balance when Britain votes on whether to
stay in the EU in May, and his government has sought to avoid
controversies during the run-up to the vote.
The Conservatives are resented in Britain's industrial heartlands
for the demise of mining and manufacturing under former prime
minister Margaret Thatcher in the 1980s.
The government has said it is taking measures to help the steel
sector but the fundamental problem remained the halving of steel
prices in the past year, caused by overcapacity in China.
Once a driver of the economy through the 19th and 20th centuries,
many of Britain's former steel towns have been decimated by the
industry's decline since its peak in the 1970s.
The leader of the opposition Labour party, Jeremy Corbyn, called on
the government to take a public stake in the industry which he
called "the cornerstone of our manufacturing sector".
Tata Steel bought Anglo-Dutch steelmaker Corus in 2007 and has since
struggled to turn the giant around.
Port Talbot, though far from its 1960s peak, still employs about
4,000 people, and Tata is one of the most significant private
companies in Wales.
Unions welcomed the decision not to shutter the plants but called on
Tata to be a "responsible seller" and on the government to play its
role.
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"We don't just want more warm words. We want a detailed plan of
action to find buyers and build confidence in potential investors in
UK steel," Roy Rickhuss, general secretary of steelworkers' trade
union Community, said.
Steelmakers in Britain pay some of the highest energy costs and
green taxes in the world and are also struggling to compete with
record Chinese steel imports, which they say have been unfairly
subsidized by Beijing.
TATA'S TROUBLES
Most steel companies, including top producer ArcelorMittal, have
been hit by plunging prices due to overcapacity in China, the
world's biggest steel market, making Tata's task of finding a buyer
all the more difficult.
Tata Steel is the second-largest steel producer in Europe with a
diversified presence across the continent. It has a crude steel
production capacity of over 18 million tonnes per annum in Europe,
but only 14 mtpa is operational.
Two of its three main European units, Port Talbot and Scunthorpe,
are in Britain, with the remaining operations in the Netherlands.
Its share price has halved in the past five years, a period in which
it recorded asset impairment of more than $2.88 billion related to
the UK business.
The stock opened about 2 percent higher in Mumbai on Wednesday, as
investors welcomed the decision to shed a burden on its Indian
operation.
For the year ending March 2015, the company took a write-down of a
little over a billion dollars in its consolidated numbers. However,
the tide seems to be turning for the India operations.
Tata also said it was still in talks with investment firm Greybull
Capital over the sale of its British long products unit, which makes
steel for use in construction.
(Additional reporting by Clara Ferreira Marques; editing by Stephen
Coates, William Schomberg and Peter Graff)
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