The two Scottish plants will be sold to the Scottish Government, which would in turn sell them on to commodities trader Liberty House. A buyer for the Port Talbot plant has yet to be secured.
The agreement follows Tata Steel’s announcement in October 2015 that it would stop its European plate production, which led to the mothballing of the Dalzell and Clydebridge plants at the end of last year.
“We welcome this deal which opens the possibility of a resumption of steel processing in Scotland,” said Bimlendra Jha, executive chairman of Tata Steel’s Long Products Europe business. “This has been achieved with the determination and support of employees, trade unions and the Scottish Government all working together.”
In a statement, Tata Steel’s Board said it had come “to a unanimous conclusion that the [Strip Products UK] Plan is unaffordable, requires material funding support in the next two years in addition to significant capital commitments over the long term, the assumptions behind it are inherently very risky, and its likelihood of delivery is highly uncertain.”
The statement also said that Tata has extended substantial financial support to the UK business and suffered asset impairment of more than £2billion in the last five years due to the conditions in the market - mostly due to the oversupply with cheaper Chinese imports and due to the economic slowdown following the 2008 economic crisis.
The decision to sell the UK business will affect 19,000 workers across 14 sites, as well as the much wider industry, according to Unite union leader Len McClusky. He said the UK was in the grip of an "industrial crisis of enormous proportions", and called for the creation of a steel taskforce and for the government to intervene to save the steel industry like it did the banks during the financial crisis.
Philippa Oldham, head of manufacturing at the Institution of Mechanical Engineers, said: “In the latest budget the Government announced commitment to our transport infrastructure, supporting the National Infrastructure Commission’s recommendations for Crossrail 2 and extensions of HS2 up to our northern powerhouse region. Not only this, but UK car production reported a growth of 13.1% growth in February. At the heart of all these projects is the requirement for steel.
“If the Government is committed to long-term strategic industrial and infrastructure plans it must take a holistic approach with a better understanding of how such closures could affect our domestic supply chains.We must ensure that the UK has the necessary skills and raw materials that we need to support these upgrades with suggestions of improved forms of financing and life-cycle costing to be part of the public procurement policies,” she added.
Business Secretary, Sajid Javid said: “I’m deeply concerned about the situation. The UK steel industry is absolutely vital to the country and we will look at all viable options to keep steel making continuing in Port Talbot.”
He added that there are buyers out there; however the Government may have to give support to secure the future of the plant until a suitable buyer is found.
Prime Minister David Cameron will hold crisis talks on the UK steel industry at Downing Street on 31 March.