Engineering news
India’s Tata Steel has written down the value of its European assets for the second time, heightening speculation that the company will sell off its European long products division.
In a notice to the Bombay Stock Exchange, Tata Steel added a £498 million charge to the £1.02 billion writedown it took in 2013.
Tata said the non-cash impairment was due to the “supply imbalance facing the global steel industry, significant volatility in iron ore and coal prices in the past 12 months and the current view of long term forecast of steel and its raw material prices”.
The impairment also includes a write down of investments in overseas raw materials projects in Mozambique, Ivory Coast and Taconite project in Canada, “because the economic viability of these projects remains uncertain at the current commodity prices”.
Since Tata entered the European market, through its acquisition of Anglo-Dutch steelmaker Corus in 2007, it has been forced to reduce costs and axe jobs as it battled declining demand.
Tata has been in talks with Geneva-based industrial group Klesch since October, but a potential sale has been hampered by the threat of industrial action after Tata revealed plans to close the British Steel Pension Scheme on 13 March.
As of December 2014, the British Steel Pension Scheme had 143,000 members, with 17,004 making up employee members and 91,264 making up pensioner members. As of November 2014, the assets of the scheme were valued at about £13.6 billion and continue to increase.
Shares in Tata Steel fell 1.5% in early trading on Friday to £3.61.