UK Steel Crisis: Tata Steel to decide fate of its Port Talbot and Scunthorpe plant next week
Tata Steel European business reported a quarterly loss of £68m in February 2016Reuters

The UK and the Welsh governments have come out strongly in support of moves to keep a strong British steel industry after steel giant Tata Steel confirmed what most already knew was on the cards. The steel giant confirmed plans to exit the UK operations after rejecting a turnaround plan which it described as "unaffordable."

In a joint statement, the government said: "This is a difficult time for workers in Port Talbot and across the UK. During the review process, we remain committed to working with Tata and the unions on a long term sustainable future for British steel making." They added: "Both the Welsh and UK governments are working tirelessly to look at all viable options to keep a strong British steel industry at the heart of our manufacturing base."

The MP for Aberavon, Stephen Kinnock, who was in Mumbai to lobby the Tata board, was briefed after the board meeting by Tata's chief financial officer. He told the South Wales Evening Post 29 March night: "We will not allow the closure of Port Talbot steelworks. One way or another we will continue to make steel in Port Talbot but it looks like Tata do not back the plan." He continued: "We will work with Tata and the UK government to help find a buyer for the plant."

Tata's statement

In a statement issued after the Tata board meeting to decide the fate of its UK operations, the company said that it had unanimously concluded that saving the plants was not affordable despite being in "deep engagement" with the UK government to seek its support to achieve the best possible outcome for the operations, The company said that it had noted with "deep concern" the deteriorating financial performance of its UK subsidiary in the last year.

The company had suffered an asset impairment of more than £2b in the last five years, it said. "While the global steel demand, especially in developed markets like Europe has remained muted following the financial crisis of 2008, trading conditions in the UK and Europe have rapidly deteriorated more recently, due to structural factors including global oversupply of steel, significant increase in third country exports into Europe, high manufacturing costs, continued weakness in domestic market demand in steel and a volatile currency.

It continued: "These factors are likely to continue into the future and have significantly impacted the long term competitive position of the UK operations in spite of several initiatives undertaken by the management and the workers of the business in recent years."

Tata Steel added: "Following the strategic view taken by the Tata Steel Board regarding the UK business, it has advised the board of its European holding company ie Tata Steel Europe to explore all options for portfolio restructuring including the potential divestment of Tata Steel UK, in whole or in parts." The steel giant announced over 1,000 job cuts in January.

The Port Talbot operations is the UK's largest steel plant, employing 4,000 people and supports hundreds of other jobs. It produces 4 million tonnes a year of strip products for use in cars, white goods, food cans and coins.

Welsh Assembly to be recalled?

There are now calls for the Welsh Assembly to be recalled to discuss Tata's latest decision. The Plaid Cymru leader Leanne Wood is seeking to have the Assembly to be recalled to discuss the possible consequences of a sell-off.

"If reports from Mumbai are true, it's devastating. All must work together now to save our steel industry," she tweeted. Wales First Minister Carwyn Jones is also supportive of the idea.

A delegation from the steelworkers' union Community and Kinnock were in Mumbai to make final representations in support of a proposed rescue plan. They had hoped that the steel company would agree to a turnaround plan to keep the industry going in Port Talbot and other UK plants.

The news will impact other Tata plants including Rotherham, Corby and Shotton. It is already in the process of selling its operations in Scunthorpe to an investment company Greybull Capital. Last year, Thai company SSI closed the Redcar steel plant, resulting in the loss of 1,799 jobs.

No government minister in India

The way the Conservative government has handled the Tata meeting in India has come under criticism. A spokeswoman for Prime Minister David Cameron conceded that no British minister was in Mumbai to monitor the progress of developments in India.

"We are working very closely with the industry to look at ways we can help to deliver a long-term, sustainable future," the spokeswoman said. "There are already a number of steps that we have taken for the steel industry more broadly. We stand ready to work with Tata."

Business Secretary Sajid Javid came under fire by Labour for planning to fly to Australia on a trade visit while the fate of UK steel industry hung in the balance. Shadow business secretary Angela Eagle noted how "Sajid Javid and his team seem to have gone missing in action at this crucial time."

A spokesman for Labour leader Jeremy Corbyn said he was "extremely concerned", adding: "The government must act now to protect the steel industry in Britain. Steel production must be maintained in Port Talbot."

Eagle suggested the government consider part-nationalising the plants to "shelter the assets until the storm has passed." She said: "I think the government should be pulling out all the stops to make certain we can preserve our steelmaking industry in this country," she told BBC's Newsnight.

She added: "We have got to get the government to deliver on the assertions, from the prime minister down, that they want to preserve the steelworks in this country." Otherwise, she added, Cameron's expressions of concern would be exposed as "tea and sympathy and hypocrisy."

Union says very dark day

Unite general secretary Len McCluskey said: "This is a very dark day for the proud communities and proud industry which is now on the verge of extinction in this country. "My message to Sajid Javid and his government is that they cannot let another Redcar situation happen. Their dithering over intervention allowed the lights of that key industrial asset to be snuffed out."