New investor could save Tata Steel UK’s Scunthorpe plant

It's been reported that Tata Steel UK has put together a restructuring plan that could offer it’s Scunthorpe refinery a lifeline.

A potential injection of £400m from a new investor could see the Scunthorpe site saved from having to shut down, according to the Sunday Telegraph this weekend – which cites sources close to the proposal.

The tentative deal could set out a plan to overhaul the business, including seeing costs scaled back, and changes to both employee and supplier contracts.

The overhaul could see the fortunes of the site transformed, moving from post losses of £100m for the year, on reported revenues of £1.6bn, to pontentially pulling in £100m in profit in as little as 24 months.

In late October 2015, Tata Steel officially announced proposals to stop production of steep plate by its Long Products Europe business.

The statement followed hot on the heels of similar announcements by SSI regarding the closure of its Redcar plant – at a cost of 1,700 jobs, and a further 1,500 jobs following Caparo Industries administration announcement.

Tata Steel stated that the restructuring was necessary due to a result of a shift in market conditions due to a flood of cheap Chinese imports, a strong pound and unsustainable energy costs.

The proposed changes would lead to around 1,200 jobs losses – roughly 900 in Scunthorpe and 270 in Scotland, as a small number at other Long Products Europe sites.

Plate mills in Scunthorpe, Dalzell and Clydebbridge were due to be mothballed, while one of the two coke ovens at the Scunthrope steelworks would be closed.