Tata Steel has pushed back to July the timetable for making a final decision on the future of its UK steel operations, as the company haggles over more government concessions to persuade it to retain the business.
Tata, which stunned the government in March by announcing the sale of its British steel business, has been reviewing bids for more than two weeks.
It is expected to unveil a shortlist on Friday and had planned to choose the preferred bidder by its monthly board meeting on June 24 — the day after the EU referendum.
But that decision is now very unlikely to be made in June, said a person close to the company, who said it was expected to come only “within two months” instead. “Circumstances have changed, which means we have to re-evaluate the decision to divest — though that decision could still go either way,” the person said.
It is understood that the board meeting will also be delayed by at least a week.
The person said that Tata was in talks with the government on moves that could change the calculations which prompted the company to deem its investment unsustainable. These would include steps to reduce electricity costs for the business, and to restrict low-priced imports, notably from China.
The government has already embarked on a consultation on reducing the rate of increase for the retirement income of 130,000 members of the legacy British Steel pension scheme. That is designed to cut billions of pounds from its long-term liabilities, easing the pressure on the owner.
Sajid Javid, business secretary, has also offered incentives to buyers including an equity stake of up to 25 per cent and loans of hundreds of millions of pounds. Thatoffer is also open to Tata as an inducement for the group to hold on to the business and cancel the sale.
Tata believes it would need a substantial package to ride out what could be an extended period of weak steel prices, abating only in about three years.
Yet there are signs that a recent rise in prices — albeit from a historic low — has already helped curb the losses at Tata Steel UK. Currency movements have also helped the British steel industry since the spring. Carwyn Jones, Welsh first minister, said on Wednesday that there had been a “substantial turnround” at Tata’s main steelworks.
“I hear that Port Talbot is now breaking even after three months ago losing £1m a day,” he said.
One figure close to Tata’s UK management said he believed that Port Talbot was no longer making losses.
But others urged caution, saying that it depended on how the numbers were calculated.