Negotiations with investor over 4,300-strong construction steel division are ongoing

The future of Tata Steel’s Port Talbot steelworks may hang in the balance, but the sale of the firm’s construction steel division is “progressing well”, according to the Indian firm.

Sale talks for the 4,300-strong construction steel division - known as Long Products - are ongoing after Tata entered exclusive negotiations in late December with investor Greybull Capital over the Scunthorpe-based unit.

Tata’s Port Talbot plant predominantly produces raw steel destined for use in consumer goods and industrial products, rather than on construction sites.

The public outcry over the potential closure of Port Talbot and loss of 4,100 jobs has prompted the government to extend existing guidance designed to give UK steel companies a level playing field when competing against overseas rivals for public sector contracts.

This means public sector clients must assess the use of UK steel for all projects, including major programmes like HS2, which will require 2 million tonnes of steel.

Ian Lawson, chief executive of the UK’s biggest steel contractor, Severfield, said encouraging people to buy British was “absolutely the right thing to do,” but added: “At the end of the day, businesses, whether it is in the public sector or private sector, still have budgets that they have to work to.”

Noble Francis, economics director at the Construction Products Association, warned the new government guidance is unlikely to make much difference because over half of the infrastructure projects in the UK are funded by the private sector, so, Francis adds, “it’s not something the government has control over.”

Business secretary Sajid Javid announced he is to co-chair a new steel council, bringing together government, industry and unions to attempt to revive the fortunes of the British steel industry.