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Potential Tata Buyer’s Involvement In Swansea Bay Tidal Lagoon

April 6, 2016

By Paul Homewood  


Thanks to Climanrecon and Stewgreen



A potential buyer for Tata Steel in the UK believes he could take over all the business without mass job losses.

Sanjeev Gupta, the head of the Liberty Group said he had "very encouraging" talks with the UK Government so far but there was still a lot of work to do.

Mr Gupta told the BBC he believed jobs at Port Talbot could be saved if at least 700 workers in its blast furnaces were retrained.

He now wants detailed talks with Tata and ministers.

Mr Gupta, who flew back to the UK on Monday evening, said it was a complicated deal, with a lot of components to it, from pensions to other liabilities.

Tata’s rolling mills and downstream businesses were relatively easier to tackle and he believed there was potential for expansion.

But he said the steel-making, heavy end of the business at Port Talbot was much tougher.

"The hot end is where we want to make the most dramatic changes," he said.

Mr Gupta said the idea was "we would look to transition from blast furnaces to arc furnaces, from imported raw material to domestically available scrap, from making carbon steel to making what we call green steel – melting and recycling scrap using renewable energy."

Mr Gupta talked about retraining the workforce and not making job losses but it would take time, while the building of arc furnaces to replace blast furnaces would take a year to 18 months.

"We’ve never undertaken anything which requires redundancies – I won’t undertake something which will require mass redundancies," he said.

"We will look to see how we can reposition the workforce from blast furnaces to arc furnaces. It will require a lot of planning and execution and it cannot be done overnight but be planned over a number of years."

Liberty has a £3.5bn turnover with 2,000 workers worldwide. It already operates a steel plant in Newport and is in the process of taking over two Tata plants in Scotland.

Mr Gupta said the most fundamental thing was to secure the hot end.

"These blast furnaces were constructed when some of the raw material was available domestically in the UK and also when there was demand in world market.

"In this excess capacity world, plants based on domestic iron ore or coal are going to be more competitive than plants like Port Talbot.

"There are many issues which have to be addressed but they are all addressable."


The plot, it seems, thickens!


The basic idea is sound enough, if not as straightforward as it appears. Melting scrap in an arc furnace is much less process intensive than the blast furnace route, which involves converting iron ore into pig iron, which then has to be processed in a BOS vessel to produce steel.

In other words, it is potentially a cheaper option, but this depends on the relative prices of iron ore, coke, electricity and scrap. 

As we know, global prices for iron ore and coal are at rock bottom currently. We also know that electricity prices are high and rising.

A big increase in demand for scrap could also push prices up rapidly.

Traditionally, blast furnace/BOS processes were capable of producing much greater volumes of steel, which also affects the equation.


However, what is most interesting is that the aforesaid Mr Gupta also has many fingers in many other pies!

For starters, according to the South Wales Argos, he has a “substantial” financial stake in the Swansea Bay Tidal Lagoon project, which would like to charge us all four times the going rate for the electricity it produces. Ironically, Swansea is only a few miles along the coast from Port Talbot.

Somehow, I don’t believe Mr Gupta will propose to buy the power for his arc furnaces from the lagoon! Indeed, it is believed that one of his conditions will be for the government to waive all green levies.


And Swansea is not the only project he is involved in. Through another of his companies, SIMEC, he also owns the Uskmouth Power Station, also in South Wales.

The coal power plant there shut in 2014, but SIMEC are now planning to convert to biomass. A similar conversion at Lynemouth received a 15 year contract to supply at £105/MWh last year, three times the going rate.


It is deeply ironic that Mr Gupta is so keen to take huge subsidies for providing renewable energy, when they have caused so many problems for the steel industry he now wishes to take over.

  1. April 6, 2016 5:05 pm

    I’m not a steel-maker, but the arc process is for lower grade, construction steels generally. It is also electrically intensive. As you say scrap steel prices are at a historical low which artificially inflates their attractiveness.

    Did TATA walk into the pensions black-hole without realising it: these have wrecked dozens of companies,(including one of my ex-employers).

    Looks like a good case for nationalising the TATA holdings aka British Steel if I remember rightly!

    • A C Osborn permalink
      April 6, 2016 5:40 pm

      No he did not walk in to the pensions black hole, he has created a lot of it, as far as I understand having not paid in to the pension fund since purchasing Corus.
      He seriously over extended himself by paying over the odds for Corus and with borrowed cash.
      He wanted tothen borrow cash from the Pension scheme to clear that high interest debt, but the Pension Fund administrators and the Employees refused.
      He then closed the Fund to all new employees.

    • April 6, 2016 6:25 pm

      Actually arc furnaces are also used for high quality steel, Jack.

      I worked in one in the 1970s where we made stainless steel. The process allows you to fine tune the alloy mix

  2. Paul2 permalink
    April 6, 2016 6:07 pm

    This is making us an international laughing stock approaching all and sundry with a begging bowl. Of course a deal will be reached in much the same way Cameron bent over backwards to the Chinese recently.
    Expect vast sums of our money to be poured into bailing out Port Talbot and enriching an Indian company. Expect grubby back room deals with a nod and a wink.
    They’re all laughing at us.

  3. April 6, 2016 6:09 pm

    I’ve just watched an interview with Mr Gupta on the local BBC Welsh TV news, he says that steel making needs LOW COST electricity (right), and he wants the Tidal Lagoons to go ahead to provide it! He made a slip of the tongue, which to suspicious me indicated it was all a done deal. To be fair to the BBC they did say in the intro that he had stakes in Tidal Lagoons, but the interviewer failed to ask the obvious questions.

    The intro was filmed from the old coal-fired power station site at Uskmouth, on which a couple of wind turbines were gently spinning, so that ticks the BBC’s green virtue box. Read about the plans for Uskmouth here:

    This company is buying prime industrial sites, probably for very small sums of money, and turning them into farms, for harvesting renewable subsidies, i.e. a double whammy to the economy, we have to pay the subsidies, and the prime industrial sites are not used for creating wealth.

  4. April 6, 2016 6:49 pm

    Nothing like a good crisis to divert everyone’s attention whilst they do a grubby deal to further their own ends; which are a complicated series of scams to skim even more money from low income tax payers and to destroy the power of the middle class.

  5. April 6, 2016 9:23 pm

    Port Talbot has a capacity of 3.5 miilion tons finished product from two blast furnaces perhaps ~1.75 mtpy each. US Steel’s Fairfield works in Alabama shut a single 2.4mtpy blast furnace in 2014 in favor of a single 1.6mtpy electric arc furnace (more flexibility, lower cost, not critical to run near full capacity). Cost $230 million, construction time 18 months. Coming on line about now. Ignoring the UK electricity/subsidies/ Chelsea tidal lagoon politics angle, the plan to shut one Port Talbot BF in favor of an EAF (and optimize the other) would appear to make sense. Some clean steel is needed to optimize EAF scrap composition, as nickel and copper scrap impurities cannot be slagged off with oxygen injection. All other scrap impurities can be. Shut the larger BF.
    Nucor is now the US largest steel producer. It is all EAF. Started out in rebar, now does continuous casting into hot and cold rolled high quality sheet. Nucor developed the natural gas + iron ore to iron pellets process precisely to adjust steel chemistry without needing a BF (and metallurgical coal, coking oven, and limestone) to supply clean steel. Throw in pig iron pellets, then inject oxygen to decarbonize. They make their pig iron pellets in Brazil at the iron ore mine to minimize shipping costs.

  6. April 7, 2016 12:09 am

    Reblogged this on Jaffer's blog.

  7. April 7, 2016 3:40 am

    `new article by Tim Worstall
    his theory is that Europe has enough scrap steel.
    I’m really not sure about that.

    See the BH comments

  8. Russ Wood permalink
    April 7, 2016 4:54 pm

    Right now, in South Africa, we’re having trouble with a Gupta family which is apparently trying to affect the Government, through their friendship with President Zuma. For your sake, let’s hope that it isn’t the same bunch!

    • April 8, 2016 7:06 am

      Good point, but I’m 90% sure they are not closely connected and the name is just a coincidence.
      – My strongest evidence is this new FT report about Sanjeev Gupta, being fishy* They would have surely said if there was a connection to South African Gupta’s who key business skill is being close to Zuma the South African president. Their family first base was Sahara Computers, whereas Sanjeev Gupta’s father biz is called Simec.
      Good BBC story on SA Gupta’s also Bloomberg ..FT ..
      – The most interesting is the tale of SA’s 9.6GW nuclear programme being bought from Putin “Who in their right mind would buy one of the most notorious dogs in the entire South African mining sector ”

      *Sanjeev Gupta wealthy ? “He said his Liberty network had global turnover of more than $3.5bn” BUT “Liberty House (UK)(covers shipping activities but not steel) had less than $60m of revenues in 2014 and profits of $90,626, on which it paid tax of $6,497.”

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