London: The sudden announcement by Tata Steel that it could sell its UK units has left the British government worried with speculation that Prime Minister David Cameron may take up the issue with Indian Prime Minister Narendra Modi when they meet in Washington, D.C.
Both leaders will be in the US capital for the Nuclear Security Summit later on Friday.
Earlier, Cameron flew back here for emergency talks with ministers to tackle the crisis engulfing Tata Steel’s British operations, amid warnings that the firm has just weeks for a rescue deal on which up to 40,000 jobs could depend, The Guardian reported.
The daily also quoted an unnamed source as saying that Tata Steel was losing one million pounds per day, with the government’s failure to back the calls in Europe for higher tariffs against cheap Chinese imports being the “last straw” to prompt the company’s decision.
The Labour Party has termed it a national crisis wanting the steel industry to be nationalised.
But British Business Secretary Sajid Javid has rejected the idea as it could carry a price tag of 1.5 billion pounds per annum. “I don’t think that nationalisation is going to be the solution,” The Guardian quoted Javid as saying.
The paper said Cameron was expected to raise the issue with Modi.
Tatas have written off 2 billion pounds from the value of the group’s UK assets, rendering the investment effectively worthless. The Guardian quoted Tata Steel finance director Koushik Chatterjee as saying that the UK operations were “quite a burden” and one which the company couldn’t sustain.
Having suffered nearly $3 billion in losses on the UK operations, Tata Steel on Wednesday said it will explore options to put its entire portfolio there up for sale, some 10 years after it forayed into Europe by acquiring Anglo-Dutch Corus for over $8.1 billion.
Tata Steel’s website says it 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 there — more than two-thirds of the group’s total capacity.
In UK and Ireland, it has three steelmaking facilities at Port Talbot, Rotherham and Scunthorpe, with a combined crude steel production capacity of 11 million tonnes per annum.