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Possible Tata Steel sale met with caution

The British Metal Recycling Association (BMRA) has raised potential concerns about the effects on the UK steel market if Tata Steel sells its Long Products Europe division.

Tata announced on 15 October that it had signed a memorandum of understanding with Switzerland-based industrial firm Klesch Group over a potential sale of the division which contains several UK-based facilities including the Scunthorpe steelworks (pictured), mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington and a rail consultancy in York, as well as other operations in France and Germany.

It employs 6,500 people out of Tata’s 30,500-strong workforce across Europe.

Ian Hetherington, the BMRA’s director-general told MRW: “Clearly Tata are a major player in UK steel and we want to see a strong UK market for steel scrap.

“We’re disappointed we don’t have a bigger market for scrap in the UK and therefore any disruption to be a matter of some worry.”

He said he hoped any potential new owners would continue steel production.

“At the moment it is not a matter of direct concern, although we would be concerned if we saw any further reduction in the size of the UK steel industry, because clearly that is the strength of our domestic market for recycled metal,” he added.

On its website, Klesh Group describes itself as “a global industrial company that acquires commodity producing companies, applies optimisation techniques to efficiently run their operations and manages risk through commodity trading strategies”.

In August, Karl-Ulrich Köhler, managing director and chief executive at Tata Steel in Europe, had noted an improvement in market conditions.

“European steel demand is moving in the right direction. Though demand remains well below levels we would regard as healthy, we can see greater stability emerging in the markets we serve,” he said.

But he noted that European steelmakers had been facing rising competition from importers, which was limiting their ability to take advantage of growing demand.

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