Mumbai: Tata Steel is seeking to sell Britain`s biggest steelmaking business, putting thousands of jobs at risk in an industry that once dominated Britain but has been brought low by falling prices, high costs and Chinese competition.
After a marathon board meeting in Mumbai, Tata said it would draw a line under its almost decade-long foray into Britain`s steel industry, exiting the country entirely.
The move could have an impact on Britain`s closely fought vote in three months over whether to stay in the European Union.
Britain`s traditionally anti-EU media have blamed Brussels for preventing London from taking greater steps to protect the industry, although supporters of membership say EU policy is not responsible for the industry`s plight.
Port Talbot, though far from its 1960s peak, still employs about 4,000 people, and Tata is one of the most significant private companies in Wales.
Unions welcomed the decision not to shutter the plants but called on Tata to be a "responsible seller" and on the government to play its role.
"We don`t just want more warm words. We want a detailed plan of action to find buyers and build confidence in potential investors in UK steel," Roy Rickhuss, general secretary of steelworkers` trade union Community, said.
Steelmakers in Britain pay some of the highest energy costs and green taxes in the world and are also struggling to compete with record Chinese steel imports, which they say have been unfairly subsidised by Beijing.
Most steel companies, including top producer ArcelorMittal, have been hit by plunging prices due to overcapacity in China, the world`s biggest steel market, making Tata`s task of finding a buyer all the more difficult.
Tata Steel is the second-largest steel producer in Europe with a diversified presence across the continent. It has a crude steel production capacity of over 18 million tonnes per annum in Europe, but only 14 mtpa is operational.
Two of its three main European units, Port Talbot and Scunthorpe, are in Britain, with the remaining operations in the Netherlands.
Its share price has halved in the past five years, a period in which it recorded asset impairment of more than $2.88 billion related to the UK business.
The stock opened about 2 percent higher in Mumbai on Wednesday, as investors welcomed the decision to shed a burden on its Indian operation.
For the year ending March 2015, the company took a write-down of a little over a billion dollars in its consolidated numbers. However, the tide seems to be turning for the India operations.
Tata also said it was still in talks with investment firm Greybull Capital over the sale of its British long products unit, which makes steel for use in construction.
($1 = 0.6956 pounds)