Tata Steel Ltd. has proposed that the U.K. government invest more than 900 million pounds ($1.2 billion) to take a stake in its British operations and protect the Port Talbot steelworks in Wales, Sky News reported.
Under the plan, the British taxpayers (state) would control a stake of as much as 50 per cent in Britain’s largest steelmaker, Sky said. The proposal, which is one of the options the company is considering, would also involve the Indian company writing off a similar amount of debt it is owed by the U.K. business.
The move is a part of efforts to secure government backing to secure the future of the business in the wake of the coronavirus pandemic lockdown.
According to ‘Sky News’, the Indian steel major is seeking GBP 900 million from the UK government’s Project Birch fund, which was set up to provide state support for strategically important businesses crippled by the pandemic.
Analysts however say it is unlikely that the government would want to inject new capital into any company applying for emergency aid unless its shareholders were also willing to do so.
The UK Sunday Times had claimed last weekend that Tata Steel was exploring the closure of the plant’s two blast furnaces and replacing them with electric arc furnaces a move that could spell job losses for some of Port Talbot’s roughly 3,500 workers.
Heavy restrictions have been placed on the funding under Project Birch, including stipulations that investments support the government in achieving its target of zero emissions by 2050.
Unions are deeply concerned that switching to electric arc furnaces would result in heavy job losses at the steelworks. Blast furnaces use iron ore and coal to make molten iron and steel, whereas electric arc furnaces typically melt scrap metal. Tata Steel employs 8,000 people in the U.K., half of them in Port Talbot.
U.K. Chancellor of the Exchequer Rishi Sunak has said he will set an “exceptionally high” bar for companies seeking taxpayer-funded bailouts during the coronavirus pandemic.