Business World

Saturday 26 May 2018

Crisis in Britain's historic steel sector catches David Cameron off guard

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Paul Sandle and Andy Bruce

Britain's David Cameron said there was no guarantee a buyer could be found for Britain's biggest steel producer after its Indian owner Tata Steel announced it was pulling out.

Nationalisation of the industry was ruled out, but there is speculation the UK government could aid a buyer through loans.

Mr Cameron said he was doing all he could following the Indian company's decision to sell its British operation, a move that has put 15,000 jobs at risk and exposed the government to accusations of failing to protect the industry from cheap Chinese imports.

Tata's biggest plant in Port Talbot, south Wales, is losing around $1.4m (€1.2m) a day as a result of depressed steel prices and high costs.

"We're going to work very hard with the company to do everything we can, but it is a difficult situation, there can be no guarantees of success because of the problems that the steel industry faces worldwide," Britain's Prime Minister said after chairing an emergency meeting on the crisis yesterday.

"We're not ruling anything out, (but) I don't believe nationalisation is the right answer."

His government has faced criticism over its response to Tata's decision, with opposition lawmakers saying it was "asleep at the wheel" when the Indian group said it was pulling out after nearly a decade in Britain.

Mr Cameron and Sajid Javid, the business minister, were out of the country when Tata's board met in Mumbai on Tuesday, leaving a junior colleague to respond.

The opposition Labour party and Britain's media said the handling of the crisis had been "chaotic" after the government rowed back on an initial suggestion from a junior minister that it could nationalise the plants for a period.

"It's absolutely extraordinary that they've been asleep at the wheel for this long," Stephen Kinnock, the local member of parliament in south Wales, told Sky News yesterday. "Why is it that the Prime Minister seems to be reacting to this as if he didn't see it coming. They're in total disarray."

Steelmakers in Britain pay some of the highest energy costs and green taxes in the world, but the government maintains that the fundamental problem facing the industry is the collapse in the price of steel, caused by overcapacity in China.

Britain imported 826,000 tonnes of Chinese steel in 2015, up from 361,000 two years earlier, according to the International Steel Statistic bureau.

Cameron's government, eager to cultivate closer ties with China, has opposed measures in Europe that could increase the tariffs paid on Chinese imports of steel, which are a fraction of the levels imposed by the United States.

Nonetheless, anti-EU campaigners said Brussels was part of the problem because rules on state aid limited the steps Britain could take to save the industry.

Mr Cameron, who does not want to stoke anti-European Union sentiment ahead of a referendum on Britain's EU membership in June, said half of the country's steel production went into European markets and the products could face European tariffs and taxes if Britain left.

He said ministers were working on measures to help the industry.

But steel workers in Port Talbot said politicians had hindered rather than helped the industry.


Irish Independent

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