Shares of Tata Steel fell 3.93% on Tuesday to close at ₹331.4 on the BSE after the company announced the sale of a few European assets and the closure of Orb Electrical Steels.
The company had announced in May 2018 the potential sale of five non-core businesses to enable it to strengthen focus on strategic markets.
One of the five non-core businesses was Cogent Electrical Steels, which is made up of Orb Electrical Steels in Newport, South Wales, Cogent Power Inc. in Burlington, Canada and Surahammars Bruks AB in Surahammar, Sweden.
Tata Steel said it had signed a sales and purchase agreement for Cogent Power Inc. (CPI) with Japanese steel firm JFE Shoji Trade Corporation.
“CPI manufactures cores for electrical distribution transformers and employs nearly 300 people,” said the company in a statement adding that the company had decided to retain Surahammars Bruks AB that makes advanced steels for electric vehicles and employs around 100 people.
Tata Steel had also found buyers for Kalzip and Firsteel, helping to secure 275 jobs.
Tata Steel had been unable to find a way forward for Orb Electrical Steels and so proposed to close the site, with a potential loss of up to 380 jobs.
Henrik Adam, CEO of Tata Steel’s European operations, said: “Today’s proposal will be sad news for colleagues at Orb in South Wales. This is necessary to enable us to focus our resources on our core business and markets.”
Orb Electrical Steels business had been loss-making for several years as it struggled to compete in the fast-moving market to supply steels used in electricity transformers in which customer requirements have outstripped the site’s capability.
Converting the site to create steels for future electric vehicle production would cost in excess of £50 million in a highly competitive market where Tata Steel faces higher-volume competitors both in Europe and globally, said the statement.
“Continuing to fund substantial losses at Orb Electrical Steels is not sustainable at a time when the European steel industry is facing considerable challenges. We saw no prospects of returning the Orb business to profitability in the coming years,” Mr. Adam added.
Tata Steel is one of the largest steelmakers in the U.K. employing more than 8,000 people.
