Tata Steel Ltd. has entered exclusive talks with Greybull Capital LLP to sell its European long-products steel business.

The agreement covers its Scunthorpe steelworks in England, as well as mills in Teesside and northern France, the Indian company’s U.K. subsidiary said in a statement Tuesday. Tata said it’s too early to know the outcome of the negotiations.

The producer has been seeking to sell the operations that make products for construction amid a collapse in prices as Chinese demand slows for the first time in a generation, spurring local mills to flood markets with record exports. Klesch Group withdrew from talks to buy the unit in August saying the industry was “bleeding to death.”

“The European business has become a drag for Tata Steel and the company may have to gradually wind up most of it in future,” said Rahul Dholam, an analyst at Angel Broking Ltd. In Mumbai. “They’re not going to get great valuations for the long-products business. That’s for sure. How low the valuation go is the question.”

Tata Steel, which bought Corus Group Plc for about $13 billion in 2007, has been cutting operations in the U.K. since the 2008-09 global financial crisis. The country’s industry has been further hit by the Chinese-driven crisis in international markets with plants closing and thousands of jobs lost.

A committee of U.K. lawmakers said Monday the government was unprepared for the crisis and blamed ministers for not having a warning system in place, and for failing to push for swift action at a European Union level.

“This is an extremely critical time for the whole industry,” Karl Koehler, chief executive officer of Tata Steel’s European operations, said in the statement. “We have been working hard to explore all options that could provide a future for the Long Products Europe business.”

 

bloomberg.com

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