British Steel buy-out
Risk of redundancies as British Steel nears final sale. Ceri Jones reports.
The plight of British Steel workers is still hanging in the balance as formal talks have begun between the Official Receiver and the preferred bidder. On Friday 16 August, the preferred bidder was revealed as Ataer Holding – a subsidiary company of Turkish armed forces pension fund, Oyak. Four days later ‘exclusive talks’ started to confirm the deal.
Ataer submitted its bid for British Steel and all of its subsidiaries, which the Official Receiver deemed ‘acceptable’. Ataer will now have two months to complete the purchase. The agreement was referred to as ‘an important and positive step forward,’ by Secretary of State for Business, Energy and Industrial Strategy, Andrea Leadsom.
Oyak Head of Mining Metallurgy Group, Toker Ozcan, was reported by The Financial Times (FT) as saying the new owner’s focus will be on boosting productivity and declined to make any comments relating to the safeguarding of jobs. ‘I am not focused on headcount but on productivity,’ he said. ‘We will take productivity to where it needs to be.’
No information has been disclosed about the specifics of the deal, such as the sale price, or reassurance offered to staff at the Scunthorpe and Teeside locations.
The deal was welcomed by various industry bodies, including UK Steel, of which the Director General, Gareth Stace, expressed it was ‘enormously positive news’ for British Steel, its workers, and UK manufacturing as a whole. ‘British Steel’s production facilities in Scunthorpe and elsewhere in the North East represent one third of the UK’s steel production and are a major strategic asset to our country. Their loss would leave our manufacturing, construction and infrastructure capability in a considerably poorer state,’ Stace said.
The steelworker’s union, GMB, also responded positively, citing ‘great relief’ at confirmation of a buyer. But this enthusiasm included a high degree of cautious concern, following a lack of information over the potential job cuts to come.
‘Our members are staring redundancy in the face as uncertainty continues to hang over the company. This dedicated and loyal workforce must not be an afterthought amid all of the speculation,’ GMB National Officer, Ross Murdoch, said.
‘GMB looks forward to engaging with the new management as soon as it is established to ensure direct employment protection and decent terms and conditions for the workers who have been put in this position through no fault of their own.’
As part of the negotiations, the FT also reported that Oyak has plans to convert the steel factories from coal to hydrogen power, in an attempt to lower the carbon emissions levels. In May 2019, British Steel’s former owner, Greybull Capital, had required a government loan to pay its £100mln carbon emissions fees. Oyak intends to cut this major output, but is also seeking financial support from the UK government to implement a fuel switch.
According to Oyak, the government should contribute to such a programme as the change would support the UK’s efforts to reach its net zero-carbon targets by 2050.