The British government has ended negotiations with the Turkish company Ataer Holding regarding its bid to buy British Steel, the Steel Times reported.
Ataer owns almost 50% of Erdemir, Turkey’s biggest steel producer, and is also the investment vehicle of Oyak, the Turkish Armed Forces Assistance Fund (the pension fund for the Turkish armed forces, the article reports).
The British government has voiced concerns about Ataer’s links with the Turkish government and has now opened the bidding process for British Steel up to other interested parties.
The Financial Times suggests conditions Ataer had demanded, such as price cuts from suppliers, had also proved a hurdle in the negotiations.
Either way, the ten-week exclusivity period is not going to be extended and the bidding process is again open to all comers.
Although suggestions that Sanjeev Gupta’s Liberty House, which already owns steelmaking facilities in Rotherham and Stocksbridge in South Yorkshire and employs some 5,500 people across 30 sites, is mooted as a preferred buyer, the company previously said it would want to close Scunthorpe’s two blast furnaces and invest in new electric arc furnaces. That is a move unions fear could lead to job losses, while the government probably fears will cost them support money in one form or another.
However, Liberty remains the preferred bidder by most in the industry despite a return to the table by Chinese steel producer Jingye.
Hebei-based Jingye produces hot-rolled ribbed bars, round steel bars, medium-thick plates and hot-rolled coil; as such, it carries considerable manufacturing experience across Scunthorpe’s product range.
Although it has only produced steel since 2002, Jingye is among the top 300 firms by size in China and is said to be involved in real estate, finance, trade, pharmaceutical, hotels and tourism, according to a local newspaper closely following the prospects for the U.K. plant.
Whether Jingye would be a better steward for British Steel than Ataer Holidings is debatable.
Both firms have a strong presence in steel production, if not via the holding companies then via subsidiaries within the group.
But so did Tata Steel, the previous owners of British Steel, before it was sold to Greybull Capital in 2016 — for a nominal £1 — and eventually led to British Steel’s collapse.
Most would agree a U.K.-based and owned firm like Liberty would make more sense, even if it doesn’t have the deep pockets a state-owned overseas firm could bring.
But British Steel’s ongoing uncertainty reflects the economic challenge all steel producers in Western markets face in trying to remain viable against cheap imports, while still operating in a high-cost base like the U.K.