Liberty House to Buy Scottish Tata Steel Mills
24 March 2016
Commodities trader Liberty House was on Wednesday poised to buy Scotland’s last two big steelworks from Tata Steel, a move that would keep the factories open in a rare glimmer of hope for the ailing industry.
The company, which last year restarted a steel rolling facility in Wales, is set to acquire the plate mills in Motherwell and Cambuslang, south of Glasgow.
Tata Steel of India last year said it would mothball the two facilities, which have roots dating back about 130 years, with the loss of 270 jobs.
Nicola Sturgeon, first minister, told the Scottish parliament that final due diligence was under way on a deal that would see the Scottish government buy the plants and then immediately sell them on to Liberty for the same amount.
“Negotiations with Liberty House and Tata Steel and the Scottish government are continuing as we speak to secure the basis for an agreement,” Ms Sturgeon said. Fergus Ewing, business minister, would have more details later in the afternoon, she added.
The transfer of ownership comes as the UK steel sector is struggling with global overcapacity and low prices. Thousands of jobs have been shed over the past year, casting doubt over the industry’s future.
It is understood the price will be a nominal amount, and Liberty will take on the liabilities of the plants and the costs of additional investment.
To attract a buyer the Scottish government last month said it would reduce business rates on the two sites for one year. Relief will be available to any new operator provided the sites continue to be used for steel production. It has also invested £195,000 to keep some workers on standby at the plants.
Roy Rickhuss, general secretary of the steelworkers’ union Community, welcomed the putative deal, but called for “further action and support” from government.
“The signing of this agreement is the first step towards restoring jobs and resuming production but there are still many steps to be taken,” he added.
Any disposal would mark a step in the unwinding of Tata Steel’s takeover of Corus, the Anglo-Dutch steelmaker it acquired for £6.2bn in 2007.
The Indian group is separately in talks with investment group Greybull Capital to sell its long products business, based at the Scunthorpe steelworks in northern England, which makes goods such as rail tracks and beams.
There are also concerns over the future of Tata’s Port Talbot steelworks in south Wales, the UK’s biggest plant by tonnage, where it announced 750 job cuts in January as part of a cost-savings drive.
Although Tata’s Scottish mills are being kept in a state capable of a restart, the decision to wind down operations there last October raised the prospect of severing long-running ties between Motherwell and the steel industry.
The North Lanarkshire town was the heart of Scotland’s steel production during the industrial age, earning the town the nickname of Steelopolis. The local football team, Motherwell FC, are known as The Steelmen.
But the contentious closure of the huge Ravenscraig steelworks in 1992 led to the loss of thousands of jobs in the area and for many marked the end of significant heavy industry in Scotland.
Last October the Redcar steelworks in north-east England closed permanently with the loss of 2,200 jobs after its owner, the UK arm of Thai group SSI, went into liquidation.
Source : ft.com