Cameron holds crisis talks as UK steel fights for its future

Tata Steel’s steel plant in Scunthorpe, north east England (AFP Photo/Lindsey Parnaby)

London (AFP) – Prime Minister David Cameron held crisis talks Thursday to salvage Britain’s steel industry after Indian giant Tata Steel said it was putting its business in the country up for sale, threatening 15,000 jobs.

The sale throws into doubt the future of an industry that fuelled British industrialisation and helped build its empire.

Tata’s decision also puts at risk Britain’s biggest steel plant at Port Talbot in the former industrial heartland of south Wales. The facility is Wales’s biggest single employer and closure would have a devastating impact on the local economy.

While Cameron said “I don’t believe nationalisation is the right answer” to protect the steel industry — hit by plunging prices triggered by cheap imports from China — he vowed to explore all options to help find a new buyer after Tata’s announcement Wednesday.

“Those jobs are vital to workers’ families, vital to those communities and the government will do everything it can working with the company to try and secure the future of steelmaking in Port Talbot and across our country,” Cameron said after meeting ministers following his early return from holiday.

Port Talbot, a central part of the Welsh economy since 1901, is reportedly losing £1 million (1.3 million euros, $1.4 million) a day in the face of high energy costs and plunging prices caused by a chronic global oversupply of steel.

“Everyone either works in Tata or knows somebody who does,” said Christina Rees, a local MP for the main opposition Labour party.

“For every job lost at Tata, four others will be affected in the local communities.”

Daniel Helson, a 20-year-old who works in the town’s coke ovens, said Port Talbot would “just disappear, disintegrate” if the plant closed.

“The houses will go. There’ll be nothing here for anyone. We’ll all have to move away,” he added.

– EU referendum implications –

Cameron is also battling to avoid the situation giving fuel to campaigners who want Britain to leave the European Union in a tight referendum on June 23.

Nigel Farage, leader of the anti-EU UK Independence Party, said Port Talbot’s position showed that a vote to remain in the EU would mean “the end of the steel industry in this country.”

But Cameron said it highlighted that Britain needed to be in Europe “making sure the markets are open”.

The government has been accused of turning a blind eye to Chinese dumping of steel on world markets in order to secure wider investment in Britain’s economy.

It rolled out the red carpet for China President Xi Jinping during a state visit last year while opposing EU plans to impose higher tariffs on Chinese steel.

Compared to the United States, EU import tariffs on Chinese steel imports are low — there is duty of 16 percent on Chinese cold-rolled steel compared to a 236 percent tariff in the US.

“It is galling that the UK government… has continued to block these changes in the EU — leaving the steel industry on its knees,” said Gareth Stace, director of UK Steel, the industry’s trade association body.

“The government must support the lifting of the lesser duty rule, otherwise steel manufacturing will be lost in the UK.”

– ‘Not going to find a buyer’ –

Metal processing company Liberty House said it was looking at some of Tata’s British assets but the group’s president Sanjeev Gupta suggested it was more interested in processing plants rather than production facilities like Port Talbot.

Analysts warned Tata would struggle to offload the production plants, of which there are three in total.

“They are not going to find a buyer because they would ask for substantial help and if they (the government) were ready to give such help, then they would have rather helped Tata,” Mohan Sodhi from the Cass Business School at London’s City University told AFP.

The steel industry’s woes are the latest chapter in the demise of Britain’s once-proud heavy industry in traditionally working-class regions in Scotland, Wales and the north of England.

Britain accounted for 40 percent of the world’s steel production in 1875, exporting to its empire and the United States.

The industry dwindled as it lost foreign and domestic market share to cheaper rivals and it has since become a politically-charged lightning rod for Britain’s industrial policy.

It was nationalised by Labour in 1949, privatised by the Conservatives in 1952, nationalised by Labour in 1967 and then privatised again by the Conservatives in 1987.

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