India-based Tata Steel has announced its intention to sell its Long Products Division in the UK and Europe, putting thousands of jobs at risk.
Tata Steel chief executive officer Karl Koehler said the steel industry is "through the worst" in Europe and that the group's Long Products Division "is moving towards" break even.
The steel giant signed a Memorandum of Understanding with the Klesch Group, which it hopes will lead to a sale. Tata Steel employs a total of 30,500 employees around the continent, 17,500 of which are in the UK.
The deal involves a number of UK based sites including steelworks in Scunthorpe steelworks, Teeside, Clydebridge and Dalzell, as well as an engineering workshop in Workington and a rail consultancy in York. Collectively this affects some 6,500 employees.
Koehler said: "We will now move into detailed due diligence and negotiations, though no assurance can be given about the outcome. We will regularly engage with our employees and other stakeholders throughout this process, and we will consult with the trade union representatives and works councils.
"Accelerating the pace of innovation on advanced steel solutions, helping our customers succeed in their markets and creating a sustainable asset base requires significant capital and expertise.
"We have therefore decided to concentrate our resources mainly on our strip products activities, where we have greater cross-European production and technological synergies.
"We want to build a sustainable business in the UK and further develop our mainland Europe business and we are committed to providing the necessary leadership and financial resources to achieve that."
Vince Cable, Business Secretary, said: "The next few months will be a time of uncertainty for the company and employees. The proposed sale shows the harsh reality of trading conditions in parts of the steel industry.
"I met the global head of Tata in India this week and he has personally re-affirmed to me his company's commitment to the British steel industry and to investing substantially in Port Talbot and strip steel.
"My officials and I will continue to work closely with Tata Steel and seek to meet the potential buyer, Klesch, to understand more about their plans. We welcome Klesch's stated intention to support the continuity of the business."