The early front-runner for Tata Steel’s UK assets is still hopeful of closing a deal despite reports of a rival rescue plan involving government support.
Sanjeev Gupta, the executive chairman of Liberty House Group, initially proposed to buy all of Tata Steel’s UK assets – including the huge Port Talbot plant in South Wales employing 4,000 staff – in April, after Tata’s board in India rejected a turnaround plan and put the company up for sale in March.
It has a turnover of £2 billion (Dh10.8bn), but was reportedly losing up to £1 million a day.
Speaking to The National in Dubai, where Liberty's commodities business is headquartered, Mr Gupta said he has "had fresh assurances and promises that the process is on and it's being pursued and will eventually conclude".
He added, “There are permutations and changes, and so on. I can’t go into details of those – I’m afraid some have already been speculated in the press – but it’s still definitely very much on.”
On Sunday, the UK's Telegraph newspaper reported that Tata Steel was close to concluding a deal to retain control of the business with government support that could see it take an equity stake in the company. Negotiations are also ongoing over its pension liabilities. There is currently an estimated £700m shortfall in funding for a £15bn pension scheme inherited from legacy firm British Steel.
However, the Financial Times reported on Monday that Tata was weighing up options to achieve a higher sale price by breaking up the business and selling off plants individually. In April, it sold two mothballed steel mills in Clydebridge and Dalzell in Scotland to Liberty House, while a division focused around a steelworks in Scunthorpe and mills in Teesside were sold to Greybull Capital last month.
Mr Gupta’s plan is to transform the fortunes of UK steel by snapping up distressed businesses and replacing iron ore furnaces with more efficient “green” mills that recycle scrap steel, then use the product in a range of “value-added” businesses, such as the Caparo Industries steel products firm he acquired from administrators last year and a business producing steel towers and wind pylons for offshore projects at newly acquired sites in Scotland.
The company currently employs about 1,500 staff in the UK, but the group has offices in 30 countries.
“We will do UK steel and engineering with or without Tata,” Mr Gupta said. “What Tata enables to us to do is do it on a grander scale, with more relevance.
“We would have a bigger voice and more power to execute our vision. And it’s the only way forward for the UK steel industry.
“The UK steel industry, and UK industry related to steel, is at a crossroads at the minute. To put it bluntly, it has failed disastrously.”
He pointed to the fact that it uses 21 million tonnes of steel and steel products each year. Of the 10 million tonnes of raw steel used, 60 per cent is imported. However, the country also exports more than 70 per cent of the 10 million tonnes of recycled steel produced each year.
He said that the GFG Alliance, a group of companies including Liberty’s commodities, steel and engineering arms, as well as his father’s SIMEC Group which has interests in energy, mining and shipping, had the support and the financial clout to be able to deliver its objectives.
The GFG Alliance is forecasting a $6.7bn turnover and earnings before tax, interest, depreciation and amortisation of $140m this year, rising to $10bn and $300m, respectively, by 2020.
The group acquired a steel mill in South Wales in 2013, a neighbouring coal plant in 2014 that is being converted to biomass, the Caparo Industries steel products business and a bank known as Tungsten Bank last year.
Mr Gupta said he anticipated that the bank would get its operating licence from the Bank of England before the end of this year. It will target customers in the industrial sector.
mfahy@thenational.ae
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