Britain says government contracts must consider local steel firms

Sun Apr 3, 2016 6:30pm EDT
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LONDON (Reuters) - Britain said on Sunday that UK steel producers must be considered for infrastructure and other government contracts involving steel supplies, as part of plans to find a long-term solution to a crisis in the industry.

The government is looking for ways to support domestic steel producers after India's Tata Steel (TISC.NS: Quote) put its loss-making British plant up for sale on Wednesday, putting thousands of jobs at risk.

Prime Minister David Cameron has said there was no guarantee of a buyer for Britain's biggest steel producer, which has been hit by high costs and Chinese competition, and a state takeover was not the answer.

Under its support measures, the government will create an approved supplier list for steel companies wanting to bid for public sector projects, such as Britain's 55 million-pound ($78.25 million) high-speed rail link, which will need two million tonnes of steel.

"By changing the procurement rules on these major infrastructure projects we are backing the future of UK steel - opening up significant opportunities for UK suppliers and allowing them to compete more effectively with international companies," Business Secretary Sajid Javid said in a statement.

The introduction of measures to ensure British steelmakers are considered for government contracts could take six to nine months, a spokeswoman for Javid's department said.

The government has faced criticism over its response to Tata's decision to sell its UK plant in south Wales, which employs 15,000, with opposition politicians saying it was "asleep at the wheel."

The government has said it is working to broker a deal with potential buyers after Tata's decision to pull out of its almost decade-long venture in Britain.

Investment firm Greybull Capital is interested in buying Tata's Scunthorpe steelworks and could announce a deal as early as Wednesday, a source familiar with the deal told Reuters.   Continued...

Workers hold placards and banners as they wait for Britain's Business Secretary Sajid Javid to leave the Tata Steel plant in Port Talbot, South Wales, April 1, 2016. REUTERS/Ben Birchall/Pool