Chinese firm Jingye is considering a bid to acquire Tata Steel UK.
While reportedly at an early stage, and with no formal sales process in play from the the Indian-owners of Tata Steel UK, which employs 8,000 in Wales and around 4,000 at its primary steelmaking plant in Port Talbot, it is understood that Jingye has approached Tata and the UK Government over a possible deal.
Loss-making Tata UK, is a subsidiary of Tat Steel Europe.
Earlier this year Jingye acquired British Steel, with its Scunthorpe steeworkers, out of liquidation.
The Scunthorpe plant was in Tata ownership up until 2016, when it was sold to US investment firm Greybull Capital.
However, it is not clear how the UK Government would feel about two of the UK' largest steelmaking plants in Port Talbot and Scunthorpe being under Chinese ownership, against the backdrop of removing Chinese technology firm Huawei from the the 5G network.
Steel magnate Sanjeev Gupta, executive chairman of Liberty Steel Group, has also said he would consider an acquisition if the Port Talbot steelworks was brought to market.
Liberty Steel, part of the GFG Alliance owned by the Gupta family, was one of a number of bidders for Tata’s UK steel business back in 2016, before the sales process was abandoned.
Tata then pursued a joint venture of its European steel business with German conglomerate Thyssenkrupp, before that was dissolved last year.
Mr Gupta, who lives in Monmouthshire, said of the Tata’s UK business: “If we are offered, we are ready to look at it. We have a strong relationship with the Tata Group and are ready to explore any kind of partnership with them. The question is of Tata’s drive. I am always ready.”
It comes after Tata Steel UK has reported a fall in demand for its steel products of around 20% due to the pandemic, against the backdrop of over supply of steel globally that predates Covid.
Under its Project Birch initiative the UK Government is exploring providing funding to major employers in sectors deemed of national significance such as steel.
So far the only business to have received financial backing under Project Birch is Spanish-owned Celsa Steel, which employs around 800 at its recycled steel mill in Cardiff with a repayable loan of £30m. Celsa has also received a loan of £2.9m from the Welsh Government.
While it has received financial backing from its Indian parent company, Tata UK Steel, which is a subsidiary of Tata Steel Europe, is looking to secure a £500m funding deal with the UK Government, as part of efforts to sustain the business for the long-term.
Conditions of any funding from the UK Government, which could potentially see it taking an equity stake in the steel business, are likely to seek a reduction in carbon emissions and supporting its target of the economy achieving net zero emissions by 2050.
This has led to speculation that any funding could also be conditional on Port Talbot pivoting from a primary steel operation, to a recycled steel one based on electric arc furnaces.
So far the only business to have received financial backing under Project Birch is Spanish-owned Celsa Steel, which employs around 800 at its recycled steel mill in Cardiff with a repayable loan of £30m. Celsa has also received a loan of £2.9m from the Welsh Government.
While it has received financial backing from its Indian parent company, Tata UK Steel, which is a subsidiary of Tata Steel Europe, is looking to secure a £500m funding deal with the UK Government, as part of efforts to sustain the business for the long-term.
Conditions of any funding from the UK Government, which could potentially see it taking an equity stake in the steel business, are likely to seek a reduction in carbon emissions and supporting its target of the economy achieving net zero emissions by 2050.
This has led to speculation that any funding could also be conditional on Port Talbot pivoting from a primary steel operation, to a recycled steel one based on electric arc furnaces.
Last week Economy Minister Ken Skates said that any UK Government support to Tata shouldn't be conditional on a move to arc furnaces, with job implications entailed.
He added: "I would be deeply concerned if conditionality [UK Government funding to Tata] was based on support that led to a significant number of jobs being lost.
"The aim of the game for everybody, us, Tata and the UK Government, is to have a sustainable business model and one that contributes less in terms of carbon emissions and also one that maximises employment numbers."
A Tata spokesman said: "Tata Steel remains in ongoing and constructive talks with the UK Government on areas of potential support. As these discussions have not reached a conclusion, it would be premature to comment on any options that may or may not be under consideration."
