Sweden’s acquisition of Tata Steel canceled due to sustainability

Sweden's acquisition of Tata Steel canceled due to sustainability

The Swedish SSAB’s control of Dutch blast furnaces has been lifted. The Swedes called off the negotiations. “We cannot bring Tata Steel IJmuiden in line with our sustainability goals as we would like,” says Martin Lindqvist, Chair of SSAB.

In November it was announced that the Dutch part of Tata Steel, including the steel plant at IJmuiden, would be separated from the British part and that talks were underway with the Swedish SSAB about a possible sale. These talks did not lead to an agreement.

“The synergies we’ve seen in a deal do not outweigh the costs and investments we need to make,” SSAB’s Lindqvist said. The company wants to produce fossil-free steel by 2045. According to the company, acquiring Tata Steel IJmuiden was too expensive to achieve this goal.

The steel plant in IJmuiden now produces the same amount of carbon dioxide as more than half of all passenger cars in the Netherlands.

Disappointed

The Dutch portion of Tata Steel would continue to be split from the other anyway. It is not known if the company is looking for a new buyer or whether India’s Tata Steel wants to remain the owner.

The government says it is disappointed that SSAB is refraining from acquiring. “The combination of Tata Steel Netherlands and the similar SSAB seemed attractive to us. The two companies are complementary and both have big ambitions for sustainability.”

Economic Affairs has yet to receive information from Tata Steel as to why the deal failed. Politicians are clear about the future. “As is known, the government is working with Tata to develop plans for an environmentally friendly and future steel company at IJmuiden. We will continue to do so.”

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An unexpected setback

The Swedes say the Dutch government has not participated in the acquisition talks. Lindqvist of SSAB sees IJmuiden’s future separate from SSAB. “It’s a great factory, with good products, one of the best in its kind, but it doesn’t fit our strategy.”

Cinta Gross, president of Tata Steel’s Central Works Board, described the news as an “unexpected setback”. Gross was not yet aware of the canceled takeover talks. “This is a big surprise to me. Also because we haven’t heard any signals from our management.”

According to Groos, the news is a major setback for the company. “Because we have been positive about this. We need to look closely at what this means for us.”

The consequences are not yet clear

The FNV and CNV trade unions were also surprised. FNV’s Roel Bergues said, “This news is great and disappointing. We were surprised, but we always said the race was not over yet. But the conversations were serious enough.”

The fact that sustainability is a stumbling block for Swedes, according to Bergweiz, means IJmuiden must do more to become more sustainable. Maybe with the government, for example with the help of ‘Wopke-Wiebesfonds’.

According to the union, it is important in any case to separate the Dutch and British branches of Tata Steel. “Tata India wanted that too and we think so.”

Whether there will be any consequences for Tata Steel employees is unknown. “We’re going to reset what now.” CNV is also curious about what management will do. “We don’t know yet if this is alarming.”

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