Geneva-based Klesch Group withdrew from talks to buy Tata Steel Europe’s long products business, amid steel makers across the globe in stress due to cheaper imports from China.
Long products are used in the construction and engineering sectors, and Tata Steel’s unit Scunthorpe had its long-products hub in the U.K. Klesch had entered talks to buy the unit in October last year.
“The Klesch Group confirms that it is no longer in talks with Tata Steel to purchase its Long Products Europe business and associated distribution activities,” Klesch Group said in an email response.
The group did not specify the reason for the pull out in its email response. However, Gary Klesch, Head of the Klesch Group, told Financial Times that he was withdrawing from the talks in frustration at the U.K. Government's apparent lack of interest in old-economy industries. “6,000 workers were being led to the slaughterhouse by minister’s failure to tackle energy costs and Chinese imports,” Mr. Klesch was quoted as saying in the newspaper’s report.
"What is the industrial policy when it comes to energy or when it comes to the massive dumping of cheap Chinese steel?" Mr. Klesch told the newspaper. The U.K. Government needed to address imports and energy costs issues urgently, in tandem with other European countries, if it wanted to retain a steel industry, he added.
Steel makers across the globe are facing profitability and margin pressure, as mills in China are flooding markets with cheaper imports as domestic demand slowed.
Tata Steel wrote off its long products business and said it expected to take a non-cash impairment charge of Rs.5,000 crore.
An email query sent to Tata Steel on Tuesday remained unanswered.
Source: The Hindu
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