Thyssenkrupp says in talks with Tata about European steel plants

Flags with the new logo of ThyssenKrupp flutter in the wind outside the headquarters of the German steel maker and multinational conglomerate in Essen, Germany, April 27, 2016. REUTERS/Wolfgang Rattay

FRANKFURT (Reuters) - Thyssenkrupp TKAG.DE, Germany's biggest steelmaker, confirmed on Sunday that it is in talks with India's Tata Steel TISC.NS about a consolidation of beleaguered European steel mills that are hit by overcapacity, weak demand and cheap imports.

Tata Steel said on Friday it had suspended the process of selling its troubled UK arm while it held talks with potential partners, including Thyssenkrupp, about alternative and more sustainable solutions for its entire European business. In addition to its UK operations Tata Steel Europe also owns the former Hoogovens steel plant in the Netherlands.

Thyssen spokeswoman Nicola Roettger, contacted by Reuters, said on Sunday her company has long said it believes that a consolidation of the European steel industry is necessary, due to the extremely difficult economic situation.

“We have also said already that in such a situation, everybody’s talking to everybody else. Among other (conversations), we are also talking to Tata Steel,” she said.

She said it was to be left open for now if, when, and with whom further steps would be taken. More specific statements would be made only if decisive progress towards consolidation could be made.

Tata had said in a statement on Friday that the talks, which could include a possible joint venture, were at a preliminary stage and the European approach was in addition to its attempts, launched in March, to sell its main British steelmaking operations, which include its Port Talbot blast furnace plant in southern Wales.

The firm said the British vote to leave the European Union, and the outcome of the UK government’s consultation on Tata Steel UK’s British Steel pension scheme, had prompted a rethink on the sale.

“Consequently, Tata Steel has now entered into discussions with strategic players in the steel industry, including Thyssenkrupp,” the Indian company said.

However, Thyssenkrupp has said in the past it is not in a position to spend cash on a merger.

Reporting by Matthias Inverardi and Ralf Banser, writing by Vera Eckert; Editing by Greg Mahlich