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Tata Steel flags hundreds of layoffs after deciding to close 2 UK businesses

Tata Steel Ltd. unit Tata Steel Europe Ltd. signed an agreement with Japanese steel giant JFE Shoji Trade Corp. for the sale of its unit Cogent Power Inc. in Canada for an undisclosed price, as part of a plan to sell five noncore assets that was announced in May 2018.

The company plans to shut down its Orb Electrical Steels unit in Newport, south Wales, U.K., which has been loss-making for several years, with the potential for up to 380 job losses.

It said Sept. 2 that the business has been struggling to compete in the market to supply steel for electricity transformers where "customer requirements have out-stripped the site's capability."

"Converting the site to create steels for future electric vehicle production would cost in excess of £50 million in a highly competitive market where Tata Steel faces higher-volume competitors both in Europe and globally," the company said, adding that it saw "no prospects" of returning the business to profitability in the coming years.

A planned tie-up with Germany's thyssenkrupp AG to combine the companies' European steel businesses fell through after being blocked by EU regulators in June over competition concerns.

Meanwhile, the company has decided to retain its Surahammars Bruks AB unit in Sweden, which makes advanced steels for electric vehicles.

It sold its Germany-based Kalzip aluminum and U.K.-based Firsteel assets in October 2018 and June 2019, respectively. The two units were also part of the noncore asset review program.

Apart from these assets, the company is also planning to close its Wolverhampton Engineering Steels Service Centre in the U.K., which employs about 26 people, as it was unable to find a buyer.

The company will soon start consultations with affected employees and trade unions at both Orb and Wolverhampton. Tata Steel said it would make "every effort" to mitigate the impact on the employees affected by the closures, including offering alternative employment at its other sites in the country.

Tata Steel executed a memorandum of understanding in August to sell a 70% stake in its Thai steel unit, subject to due diligence.

Revenue from its European steel segment for the June quarter was down due to lower deliveries following a shutdown of its Netherlands facility.