Tata Steel to merge European operations with ThyssenKrupp

Creation of Europe’s second largest steel group is likely to lead to about 4,000 job losses but helps safeguard Port Talbot site. India’s Tata Steel has paved the way for a merger of its European operations with the German steel manufacturer ThyssenKrupp, creating Europe’s second largest steel group after ArcelorMittal.

Tata said the two companies had signed a “memorandum of understanding” to create a 50/50 joint venture based in Amsterdam, with an annual turnover of about €15bn (£13.3bn), 48,000 employees, and annual shipments of about 21m tonnes of flat steel.

The two companies have been in talks to combine their European operations since Tata abandoned plans to sell its UK steel business last year, safeguarding the immediate future of the Port Talbot steelworks in south Wales.

A major hurdle to the merger was removed last month, when Tata reached an agreement over its £15bn pension scheme.

The tie-up is expected to result in about 4,000 job losses, split between the two companies and affecting both administrative and manufacturing roles. Tata and ThyssenKrupp expect to make annual cost savings of between €400m and €600m by combining their sales and administrative functions, research and development, and procurement and logistics.

Roy Rickhuss, chairman of the coordinating committee representing the Unite, GMB and Community unions, said: “The steel trade unions cautiously welcome this news and recognise the industrial logic of such a partnership. This would create the second biggest steel business in Europe, which could deliver significant benefits for the UK.

“As always, the devil will be in the detail and we are seeking further assurances on jobs, investment and future production across the UK operations. As a priority, we will be pressing Tata to demonstrate their long-term commitment to steelmaking in the UK by confirming they will invest in the reline of Port Talbot’s blast furnace No 5.”

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