Tata Steel has signed a Memorandum of Understanding with the Klesch Group to undertake detailed due diligence and negotiations for the potential sale of its Long Products Europe business and associated distribution activities.

The memorandum covers several UK based assets including Tata Steel's Scunthorpe steelworks, mills in Teesside, Dalzell and Clydebridge in Scotland, an engineering workshop in Workington and a rail consultancy in York, as well as operations in France and Germany. About 6,500 people are employed at Long Products Europe and its distribution facilities.
 
Karl Koehler, chief executive of Tata Steel's European operations, said: "We will now move into detailed due diligence and negotiations, though no assurance can be given about the outcome."

Explaining the context and rationale for this decision, he added: "We've improved the competitiveness of Tata Steel's European operations, including Long Products Europe which now supplies more of the innovative steel rail, rod, plate, sections and special profile products demanded by customers.

"Accelerating the pace of innovation on advanced steel solutions, helping our customers succeed in their markets and creating a sustainable asset base requires significant capital and expertise. We have therefore decided to concentrate our resources mainly on our strip products activities, where we have greater cross-European production and technological synergies.”

Tata Steel has invested GB￡1.2 billion (1.5 billion euros) in its UK operations and trained 1,200 UK apprentices and graduates since acquiring Corus in 2007.

Gary Klesch, founder and chairman of The Klesch Group, said: “We are delighted to announce this agreement with Tata Steel regarding the Long Products Europe business and associated distribution activities. The Klesch Group has deep experience in the long products sector, and I look forward to sharing this experience with their team. We believe there is a growing market for the first class products made by this business and we intend to capitalise on this demand.”