Read more: The government did nothing to avert the Tata Steel crisis
What prospects are there for the Port Talbot steelworks now that the investment house Greybull has bought Tata Steel’s Long Products division for £1? Greybull is going to invest £400m in the Scunthorpe steelworks in return for reductions in pay and pensions. They might be interested in turning around Port Talbot and the Strip Products group too.
Another potential saviour is Sanjeev Gupta, the Wales-based head of metals group Liberty House. But Gupta’s vision for Port Talbot involves converting its blast furnace into electric furnaces that melt scrap steel, a radical plan. A management buyout is also possible—if a heavyweight financial backer can be found, as Port Talbot needs capital investment of up to £2bn. In a Financial Times interview in early April, Ratan Tata, the former chairman of the Tata Group, referred to its UK steelworks as “under-invested and over-manned.”
In January, Tata Steel Europe announced 1,000 job losses in strip products, 750 of them in Port Talbot, the UK’s biggest steelworks. The optimistic reading of the news was that Tata HQ in Mumbai were still trying to make the plant profitable and willing to carry the £1m-a-day losses while doing so. The pessimistic reading was that the Tata parent group were desperate. The hundreds of millions of tonnes of surplus Chinese steel on world markets had spooked them, and they had calculated that it might be decades before UK steel strip could return to profit.
The Welsh government put £60m on the table to encourage Tata Steel to invest in the Port Talbot plant. But this deal was conditional on the UK government contributing at least £300m. And it did not—presumably, the Treasury failed to cough up. It simply does not like manufacturing, it seems.
Now, after Tata Steel’s announcement in late March that it will sell off its entire British operation, the politics of steel have changed. Sajid Javid, the business secretary, has floated the idea of partly nationalising Port Talbot. With the EU referendum coming up in June, the UK government is suddenly willing to find the money.
Should a management buyout succeed or Greybull decide to invest,…