Talks With Klesch Group Discontinued: Tata Steel

London: Tata Steel on Wednesday said talks with Switzerland-based Klesch Group for sale of its long products Europe business have been discontinued.

Tata Steel confirmed that "the negotiations about the potential sale of its European long products business and associated distribution facilities to Klesch Group have been discontinued".

The company had been in talks with Klesch following the signing of a memorandum of understanding (MoU) in October 2014, it added.

As of August 2, 2015, the long products business, with the associated distribution facilities, became a wholly-owned subsidiary of Tata Steel UK Ltd, the company said.

The long products Europe business manufactures plates, sections, wire rod and semi-finished steel for different markets, including construction, ship-building and engineering, energy and wire drawers. These products are made at its mills in Teesside and Scunthorpe in the UK.

"The new stand-alone business combines the strength of Tata Steel with a flexible and more focused operational approach."

"The long products business will continue to focus on supporting customers by supplying them with innovative, advanced steel products - rail, wire rod, plate, sections and special profiles," it added.

This market differentiation strategy will remain a key focus for long products as progress is made towards a more sustainable future for the business, Tata Steel said.

The company's European operations chief Karl Koehler said, "The long products business has been facing severe challenges. The establishment of long products as a wholly-owned subsidiary of Tata Steel UK has created a new structure that will enable it to determine the strategic options to be assessed and the appropriate actions to be taken."

The UK steel industry is faced with stiff headwinds in the shape of rising imports, uncompetitive energy prices, a strong pound and the lack of an industrial strategy for the steel sector, he added.

"Now more than ever the UK government needs to demonstrate commitment to steel as a foundation industry for the UK economy and to take immediate action to mitigate the effects of those issues which it has the power to influence," Mr Koehler said.

The development comes in the backdrop of the development that Anglo-American industrialist Gary Klesch has abandoned his plans to buy the LPE plant, citing rising energy costs and Chinese imports as ruining the UK steel industry.

Klesch Group is an industrial commodities business with three divisions specializing in the production and trading of chemicals, metals and oil with revenue of $4.5 billion across 30 locations in over 17 countries around the world.