Klesch Group drops plans to buy out Tata Steel unit.

US billionaire Gary Klesch's Klesch Group has abandoned plans to buy Tata Steel's long products unit in the UK, which employs 6,000.

Klesch blamed the withdrawal on rising energy prices and cheap imports from China. He was quoted by Financial Times as saying he was 'frustrated' by the UK government's failure to address either of these issues.

'The industrial side is hurting. If it was important to them to ensure those jobs were saved, they would figure it out.' Tata’s long products division manufactures transport rails and steel sections for use in construction, heavy industry and excavation. It includes plants in Scunthorpe and Teesside in England, as well as Dalzell and Clydebridge in Scotland. There are also sites in Workington and York along with other operations in France and Germany.

Steel unions said the failure to come to a deal would not have a direct effect on jobs and called on the government to do more to help plants in the UK to compete.

Roy Rickhuss, general secretary of the Community union, said: 'The UK continues to be at a disadvantage because of high energy costs, compounded by environmental levies which are not faced by competitors in Europe. The government’s much-heralded support for energy-intensive industries has been slow to come on stream, whereas French and German producers have benefited from policy changes by their own governments for a number of years.'

BS