London, Jul 26 (PTI) Tata Steel is reportedly offering the British taxpayer a 50 per cent stake in its Port Talbot steelworks in Wales as 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.
The proposal for the government to take an equity stake and in effect part nationalise the plant is said to be one of the options under discussion.
“A source close to Tata Steel said the proposal – which is just one of the options the company is examining – would involve its parent company writing off an equivalent quantity of debt owed to it by the UK business,” Sky News said.
“The talks are at a tentative, rather than concrete, stage, and the structure of any deal, as well as the size of any financial contributions, remain far from being finalised,” it adds.
Analysts 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 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. PTI AK NSA