According to Welsh MP Stephen Kinnock, the largest steel manufacturer in the United Kingdom needs around £500 million in government funding to see it through the ongoing global health crisis.
Since its major European customers stopped production, Sky News announced Saturday that Tata Steel has asked the British and Welsh governments for financial rescue. Talks with the Treasury and the Department of Finance, Energy and Industrial Strategy are said to be ongoing.
The steel giant has around 8,385 workers under its payroll in the UK, and that includes approximately 4,000 personnel in Port Talbot and 2,800 elsewhere in Wales.
A representative for the Welsh government stated that ongoing discussions continue with Tata Steel with regards the kind of financial aid the company needs to sustain a robust steel making operation in the UK and in Wales.
A spokesperson for the UK government disclosed that said the government has implemented a far-reaching program of financial relief to help businesses survive the ongoing pandemic.
Sources said that the bailout package would come in the form of commercial loan that would be payable as soon as global demand for steel normalizes.
Earlier in April, Tata Steel reported a sudden decline in steel demand in Europe after a host of steel-using manufacturers halted operations, including European vehicle makers, which had prompted the company to trim down output at some of its facilities.
Tata Steel's profits volume in India dropped 15 percent year-over-year to 4.03 million tons as the lockdown led to operational problems and weaker demand, triggered by the shutdown of activities in construction, automotive, and other key segments last month.
However, output volume rose 6 percent to 4.74 million tons. Tata Steel also hit 8 percent output rally for fiscal year 2020 in India, along with a record yearly profits.
This was backed by enhanced Tata Steel BSL and buyout of Usha Martin Steel business by Tata Steel Long Products. Tata Steel BSL also posted its record annual performance. The figures are provisional as the firm has yet to disclose its fourth quarter and yearly sales data.
Meanwhile, Kinnock pointed out that the cap on the British government's coronavirus large business interruption loan program needed to be increased above £50 million.
Kinnock said the £50 million limit on loans currently available under the government financial package is only around 10 percent of what Tata Steel actually requires.
The steel company expects that it will take more or less six months to resume operations, or as close as possible to normal levels, and the obstacle they have is cash flow in that six-month timeframe.
