Looking to realign its presence in Europe following the U.K.’s Brexit vote on June 23, India-based steel producer Tata Steel is in talks with German-based ThyssenKrupp AG and the British government about a possible joint venture for the European market.
Tata Steel UK had been trying to sell its large steelmaking facility in Port Talbot, Wales, due to a slow European steel market and stiff competition from China-made steel. But with the U.K.’s vote to pull out of the European Union casting the future of the U.K.’s steel industry further into doubt, Tata said it opened talks with ThyssenKrupp on July 8—and now also is working with the U.K. government—to keep the plant open under a new joint venture.
While a deal with ThyssenKrupp could keep the plant open, it would require significant intervention by the U.K. government. The JV would require rewritten laws to allow the deal, as well as government loans worth hundreds of millions of dollars to cover the cost of restructuring the company, including its entire pension scheme.
With roughly 11,000 jobs at risk if Tata Steel leaves the U.K., the incoming Conservative government has expressed interest in trying to help keep the plant open. Greg Clark, the new secretary of state for business, energy and industrial strategy, on June 20 met with Tata Steel U.K. executives as well as workers at the steel plant.
“I am encouraged that Greg Clark has met with steelworkers in his first week on the job,” said Roy Rickhuss, union representative for the steelworkers at Port Talbot. “The new secretary of state clearly understands the scale of the challenge still facing the industry, but his words to steelworkers today must be followed by firm actions to help save their jobs.”
Tata Steel and ThyssenKrupp declined to comment as negotiations continue.