Tata Steel UK on Thursday signed a deal to sell its Speciality Steels division to Liberty House Group for a total consideration of £100 million ($126 million) as part of restructuring of its European operations.
The sale agreement covers several South Yorkshire-based assets, including the electric arc steelworks and bar mill at Rotherham, the steel purifying facility in Stocksbridge and a mill in Brinsworth as well as service centres in Bolton and Wednesbury, UK and in Suzhou and Xi'an, China, Tata Steel said in a statement.
The deal, which is subject to regulatory clearances, secures 1,700 jobs, mostly in South Yorkshire in the north of England, Tata Steel, Britain's largest steelmaker, stated in its release.
The Speciality Steels division is one of the world's biggest suppliers for the aerospace industry, with customers that include Rolls-Royce, Boeing and Airbus, and the automotive and oil and gas industries.
"This is good news for Speciality Steels and for Tata Steel's core business in the UK. For Speciality Steels, which is largely independent of our European strip products supply chain, this is an important step forward in securing a future for the business under new ownership. Today's news also marks another important step forward in realising a more sustainable future for our Port Talbot-based supply chain in the UK," said Bimlendra Jha, CEO of Tata Steel, UK.
"Like our former Scunthorpe-based Long Products business, which we sold last year, we will be handing over a business, which has been transformed following difficult decisions to restructure and refocus on high-value markets. Employees, trade unions and the management team have worked incredibly hard at Speciality Steels to improve its performance and I am delighted to say that the business is now on an improvement track, which will enable it to thrive in the future," Jha added.
The transaction is subject to receipt of necessary regulatory clearances. The parties will also be working to complete consultation with employees and the transfer of supplier and customer contracts, Tata Steel said, adding that the two groups have worked constructively together to finalise the agreement.
Tata Steel UK is currently consulting with its employees on a number of proposals that would structurally reduce risks and help secure a more sustainable future for its wider UK business. It is also in discussion with the British Steel Pension Scheme trustees and the Pension Regulator to develop a structural solution for its UK pension scheme in the coming months.
Tata Steel said it continued to support its UK business and its process of transformation to create a sustainable future for its UK stirp products business. Tata Steel's strip products business will continue to employ almost 9,000 people in the UK, manufacturing advanced products for sectors like the automobile industry by utilising the unique capabiities of blast furnace steel making, it added.
Tata Steel has invested £1.5 billion in the UK business since acquiring Corus Steel in 207. This includes £85 million invested this year on a range of sustenance and improvement schemes.
Besides, it continues to invest in improving manufacturing capability, enabling the production of premium steels in Shotton, Llanwern, Trostre and Orb in Newport, as well as environmental schemes for Port Talbot's power plant.
Investments in packaging steels, electrical steels, an automotive finishing line, laser welding and next-generation coated products support the company's focus on making differentiated and advanced steel products for key manufacturers in the UK and elsewhere.
Tata Steel Ltd, India's biggest steelmaker by overall capacity, is currently in talks to merge its European operations, including its remaining UK businesses, with Germany's Thyssenkrupp.
The success of the talks hinge on Tata getting regulatory approval to spin off its £15 billion pension scheme into a standalone entity, because Thyssenkrupp will not take on the UK unit's pension liabilities in the event of a merger.
Tata Steel said it was seeking to develop a "structural solution for its UK pension scheme in the coming months", and it was also consulting employees on how to secure a sustainable future for its remaining UK business.
The steelmaker's UK employees have voted on closing the pension scheme to future accrual, with vote results due this month. Tata Steel is looking to spin off the pension scheme that has 130,000 members.