A glimmer of hope for the British steel industry emerged with indications that Tata might retain its Port Talbot plant amid improving prospects for the UK business.
Sources within the company said it had “not ruled out” keeping the British business, including the Port Talbot site, even as it sought to find another buyer.
The potential U-turn, though couched in caveats and conditions, came amid reports that Tata’s British operation had dramatically reduced its £1 million-a-day losses and is close to making an operating profit for the first time in more than a year.
The company is pressing ahead with plans to sell the business in which the Government has pledged to take an equity stake of up to 25 per cent. But that could change if the outlook improves, particularly in the international price for steel, the weakening of the pound and in European Union moves to cut the scale of Chinese dumping of steel on the global markets.
The strip steel business had been steadily cutting back losses for months when the Tata board decided to pull the plug by refusing to back a turnaround plan – dubbed the Bridge – which would have involved a cash injection of £100 million.
In the year to the end of March, the Port Talbot plant produced a record 3.2 million tonnes of steel coil, leading one member of a possible management buy-out to say that “steel making in Port Talbot and the UK is not the basket case that many people seem to think it is”.
A senior source within the Tata group told journalists that the decision to pull out of the UK steel industry still stood but “what happens in a week, two weeks, I don’t know. We are looking at the business plan bearing in mind steel prices are going up and assuming Chinese dumping can be reduced. If we can some way or other bridge the gap, Tata will stay. But at the moment they can’t bridge it.”
Tata has contacted scores of potential buyers for the Port Talbot plant, on which 11,000 jobs rest with double that number in the supply and services sector. Welsh billionaire Terry Matthews remains the most prominent possible saviour but no financial details have been put forward.
News of a possible turnaround came as Prime Minister David Cameron visited Port Talbot for the first time for talks with the management, union leaders and workers.