The UK’s decision to leave the European Union (EU) has not had any immediate impact on Tata Steel Ltd’s plans to sell its Port Talbot manufacturing facility. “The sale process is on,” Tata Steel’s group executive director (finance and corporate) Koushik Chatterjee said in Kolkata on Wednesday.
Asked if Tata Steel had any plans to stay invested in the south Wales factory, Chatterjee said the British government had offered some incentives to help in its revival, and the company has, in turn, shared them with the bidders.
The package includes hundreds of millions of pounds in loans from the UK government, according to reports in the British media.
“The package is being evaluated by the bidders,” he added, rejecting speculation that Tata Steel had called off its sale plans following the 23 June referendum on EU membership, and that potential buyers were no longer interested in the facility.
On 30 March, Tata Steel said that, to cut losses, it had decided to exit its bleeding UK factory, which came into its fold when in 2007 it acquired Corus Group Plc. Tata Steel’s investment in the acquired assets has since been written down almost entirely.
According to some estimates, Tata Steel was at one point losing £1 million a day on its UK operations. The company shortlisted bidders in early May, but has not been able to close a deal yet.
British lawmakers were at one point encouraging Tata Steel to stay put because they were not convinced about the future of the steelworkers in the hands of a new owner.
Ahead of the UK referendum, Tim Morris, head of public affairs at Tata Steel Europe, had said in an internal memo to the steelworks’ staff that access to the EU market is “fundamental to our business”.
Asked how Brexit—Britain’s exit from the EU—could impact the future of the Port Talbot steelworks, Chatterjee said it was too early to take a call, describing early reactions to the referendum as “knee-jerk”.
He said he wasn’t immediately concerned that the incentives offered by the British government could be withdrawn after David Cameron stepped down as British prime minister.
Brexit was initially feared to be a killer blow for Tata Steel’s UK operations. The EU is its biggest market: it sells around a third of its total output in the bloc, Morris had said in the memo, urging workers to give “careful thought” to the referendum because its outcome could “make a difference to your work life”. At least 15,000 jobs are at risk.
A small section of analysts, however, are of the view that the Port Talbot steel mill may benefit from the sterling’s slump in the wake of Brexit because Chinese imports are going to become more expensive in the UK, which in turn could open up more opportunities in the domestic market. The sterling plummeted to a three-decade low against the dollar in the past week after the UK voted to leave the EU.
Source: Livemint