Klesch Group pulls out of Tata Steel long products deal

Mumbai: Geneva-based Klesch Group on Tuesday said it was no longer interested in buying Tata Steel Europe’s long steel division.

“We have pulled out of buying Tata’s long products. The European Union, as well as India, needs to address Chinese steel dumping,” said Gary Klesch, founder and chairman, Klesch Group, in an email.

An email query sent to Tata Steel on Tuesday remained unanswered.

Tata Steel Europe had entered into an understanding with Klesch Group for the sale of its long steel division in the UK in October 2014.

The Financial Times first reported Klesch group’s intention to pull out of the potential deal. “6000 workers were being led to the slaughterhouse by minister’s failure to tackle energy costs and Chinese imports,” Klesch was quoted as saying in the newspaper’s report. “Withdrawing in frustration at the (UK) government.”

With Klesch formally withdrawing interest, it would be a tough call for Tata Steel, which is struggling to improve its European operations. Several analysts saw a sale for the long steel division as a key development for any significant turnaround for Tata Steel’s European operations.

The European steel industry grapples with weak demand, high energy costs and cheaper Chinese imports. In July, Tata Steel announced a re-focusing strategy from its bar business to high-value steel, citing government inadequacy to bring down energy costs in the UK as one of the reasons. The re-focusing strategy will result in about 720 job cuts.

At 1.19pm, Tata Steel Ltd lost 0.3% to ₹ 247.25 on Tuesday on the BSE, while the benchmark Sensex lost 0.97% to 27,914.96 points and the BSE Metal gained 0.1% to 8,583.47 points.