Rumoured rescue package offers hope for Tata Steel

Coronavirus may have come to the aid of the UK’s ailing tinplate supplier Tata Steel.

The Indian-owned company’s mills in South Wales and other parts of the UK are reportedly about to receive part of a multi-billion pound Treasury rescue package to help strategically-important industries get through the pandemic.

Tata Steel, which has been suffering from a coronavirus-related slowdown in the steel industry, is said to be close to securing the emergency funding, the Financial Times reported.

A Tata Steel spokesperson said: “We have been, and continue to, seek government support in the UK, the Netherlands and all geographies we operate in. It would not be appropriate to comment on ongoing discussions with governments.”

The company supplies steel products to the most demanding markets, including construction and infrastructure, automotive, packaging and engineering. Its Tata Packaging Steel unit makes blackplate, tinplate and electro-coated chromium steels, along with smaller quantities of polyester-coated steels for the canmaking industry. 

In 2018 the tinplate business’s combined sales to canmakers supplying the food, paint and aerosol sectors were €1.03 billion (US$1.16bn), or about a sixth of its total sales. However, the wider group has been struggling and, according to the FT report, it reported losses of £157million ($197m) and £48m in the past two years.  

If the agreement goes ahead, Britain’s largest steel producer will receive hundreds of millions of pounds, including its steel works at Port Talbot in Wales with a workforce of 8,000, according to the FT report. Port Talbot includes the nearby Trostre tinplate mill.

The money is part of ‘Project Birch’, a government initiative to provide support to businesses thought to be crucial to the UK economy.

The FT also said the planned bailout contains a mechanism so that some of the debt could be converted to equity. If that happens, it would be the first time for more than 30 years that the British government has held a stake in the UK steel industry.