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Kallanish Kallanish

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September, 27th 2020

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AUG 04
01:00

Klesch knocks back on Tata long products deal

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With both parties having been remarkably quiet for a while, it emerged on Tuesday that the Klesch Industries bid to buy Tata Steel’s UK long products operation has failed. According to a report in the Financial Times, Gary Klesch has decided to withdraw his bid. This leaves the so-called “… standalone option” as the working alternative (see Kallanish 29 May).

The deal was fist mooted in October and was not well-received by the trade unions involved. In a comment yesterday that smacks of ‘We told you so…’ the UK trade union Community says, "It seems that Mr Klesch may not have been the right person for the job…”

Both Klesch and the trade unions take the opportunity to attack the UK government’s handling of what is fast becoming a UK steel production crisis. Community even sides with its former protagonist. “… his [... Klesch's] analysis of the challenges facing the UK steel industry is strong and one that is broadly shared by unions and steel employers…” it says in a statement.

“The government's much-heralded support for energy-intensive industries has been slow to come on stream, whereas French and German producers have benefited from policy changes by their own governments for a number of years”, the statement continues.

Klesch told the Financial Times that the government has failed to tackle energy costs and Chinese imports. With the absence of government subsidies in the sector, he feels the Tata long products investment would not be profitable, the report says.

It is becoming clearer that the UK government has only marginal interest in whether the UK steel production sector sinks or swims. The new administration has a 5-year mandate to govern, largely won from sections of the population not dependant on steel production for a livelihood. It could be a long five years for the UK steel sector, Kallanish observes.