The business secretary said he wants Tata to agree a process for selling its UK steel business when they meet in Mumbai on Wednesday.
Sajid Javid hinted at the financial support that ministers would be willing to provide to secure a sale of Tata’s British assets, saying he wants potential buyers to understand that the UK government would have a role if the CEO, Cyrus Mistry, pushed for a sale.
Javid also revealed that Liberty House – owned by Sanjeev Gupta – is not the only company to show interest. “It’s great that this interest is out there,” he said.
About 40,000 jobs are at risk after Tata announced last week it would sell its UK steel business, including the blast furnaces at Port Talbot, the biggest steelworks in the country.
The business secretary said meetings on Tuesday with David Cameron and the Welsh first minister, Carwyn Jones, had been constructive. Javid is holding meetings with the Welsh government, trade unions, and Liberty House before flying to Mumbai to meet Tata.
“I’ve met Liberty before and I’m very happy to meet them again [on Tuesday],” Javid said. “I’m looking forward to that. But it’s right that there is a role here for the UK government and I’ve set out how we can help. There’s a lot of detail there to work out and of course it depends on who the buyer is.
“But the important thing is, where the buyers are coming forward we’re ready to work with them.”
The Welsh first minister said his message to Cameron at the meeting, which was also attended by Javid and George Osborne, had been: “These plants cannot close.”
Jones told the Guardian that pulling out of the European Union would result in high tariffs on British steel and would “further undermine” the country’s steel industry. He said that in their talks Cameron had told him that the UK government was prepared to step in to help the sale of Tata’s assets.
Jones said the prime minister “recognised that work needs to be done on pension liability, on increasing tariffs and high energy prices”. He also said ministers had admitted that losing the steel industry would be a security threat because of the need to produce equipment for the military.
“There will need to be action from the UK government in order to make a sale more attractive. We were surprised by the timescale of weeks,” added Jones. “Tata have confirmed that all their assets will be in a saleable position. I don’t think they will want to surrender that reputation for corporate social responsibility.”
On Europe, he added: “What we do know is that if we weren’t in the EU we’d have enormous tariffs on British steel. We wouldn’t be able to compete with steel producers outside Europe. If there were any barriers to that market [it would] undermine the steel industry further.”
It would be “financially daft” to pull out of the EU and expect it to help the industry, Jones said.
Speaking before a meeting with Javid, Gupta said the biggest obstacle to reviving the lossmaking business was the giant blast furnace at Port Talbot. But he suggested it could be possible to switch to arc furnaces to recycle scrap steel instead of importing raw materials and then exporting scrap.
Asked if he thought the business could be overhauled without job losses, Gupta said: “Yes, absolutely, that would be my intention.”
Liberty House already owns steel plants in the UK, including in south Wales, and has been taking on assets affected by the crisis in the steel industry. It reopened a steel mill in Newport, south Wales, last year after spending two years reviving the site. Last month, Gupta also bought two mills in Scotland that had belonged to Tata Steel.
Gupta told BBC Radio 4’s Today programme that he believed 2,000 of Port Talbot’s workers employed at the blast furnace could be redeployed within the business. He has argued for some time that British steel’s future lies in recycling scrap rather than importing slabs to be melted down.
However, Gupta warned that it was early days and that his company had not had the chance to inspect Tata Steel’s business or talk to the company or the government.
“What anybody looking at this prospect must contend with is: ‘What is the main problem of the viability of this business?’ The main problem we see is the blast furnace, because they are importing all their own materials … It will take years to make this transition from blast furnaces to arc furnaces, but there has to be a long-term plan.”
Gupta said Tata Steel’s pension fund, with 130,000 members and liabilities of almost £15bn, was another obstacle. He declined to say whether Liberty House would buy Tata Steel’s UK business if the pension fund were split off. “It is certainly an issue that has to be tackled, but for us the focus is the absolute viability of the plant first,” he said.
