SEVERSTAL, the Russian steel group, has approached Tata Steel with a £1bn ($1.95bn, €1.48bn) offer for Corus’s Scunthorpe plant, Britain’s biggest remaining steelmaking operation.
The move, confirmed by two separate sources, follows Tata’s victory over Brazil’s CSN in the £6.7bn auction for the Anglo-Dutch steelmaker.
It would mark the first entry into British steelmaking for Alexei Mordashov, Severstal’s anglophile chairman, who listed Severstal in London last November, valuing it at £6.5bn.
Russian, Brazilian and European steelmakers are circling amid speculation that Tata will sell Corus’s long products division – which makes steel girders, rods and rails – to pay down some of the £4.4bn it has loaded onto its acquisition vehicle Tata Steel UK. Interested parties include Brazil’s Gerdau, Russia’s Evraz and Arcelor Mittal.
Consultants estimate that about 80% of the value in the long products division resides in the Scunthorpe plant. The remainder is at the Rotherham plant,which makes specialist automotive steel.
Scunthorpe and Rotherham are completely independent of one another, meaning they could be sold separately. Potential buyers of Rotherham include Alisher Usmanov, the Russian industrialist who attempted a creeping takeover of Corus in 2005
There is a logic in the splitting of Corus "long products" from it's larger strip mills operations. The steel plants are in different parts of the UK with management, marketing and logistics that would easily function independantly. As well as helping Tata recoup some of their investment, the splitting of ownership could offer more security to the plants and their workforce.