A Cardiff steelmaker is expected to be the first major 海角视频 employer to get backing from a new coronavirus 海角视频 Government funding scheme for firms deemed of national strategic importance.
Catalan-owned owned Celsa Steel 海角视频 is understood to be close to striking a funding agreement of £30m with the 海角视频 Treasury under the Project Birch initiative.
Project Birch provides an option for loans to be converted into equity, which could see the 海角视频 Government having a stake in businesses supported. In return for £30m, Celsa will have to accept terms that include assurances on the workforce, reductions in emissions and strict curbs on executive pay.
The maker of reinforced steel, from recycled steel, employs around 400 in Cardiff and produces around 1.2 million tonnes of steel annually.
The 海角视频 Government declined to comment. Celsa was contacted for comment. The Welsh Government has been supporting Celsa in making its case to the Treasury.
It is understood that with 海角视频 Government backing, Celsa will be able to secure a further £30m from private sources.
Project Birch is designed for those businesses not able to access finance under the 海角视频 Government’s various coronavirus loan schemes, administered by the British Business, as well as whose those credit rating mean it is not eligible for the Covid Corporate Financing Facility from the Bank of England and the Treasury providing liquidity to larger firms through the purchasing of their short-term debt in the form of commercial paper.
A Welsh Government spokesman said: "We are engaging with the 海角视频 Government about support for the steel sector. Steel companies need urgent support to sustain a strong presence in Wales and the 海角视频.”
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Also seeking funding under Project Birch is Indian-owned steelmaker Tata, which employs 7,000 in Wales.
It is seeking £500m in funding to support its primary steelmaking plant in Port Talbot, that directly employs around 4,000, as well as its downstream business that includes those at Trostre, Caerphilly, Llanwern and Shotton.
The Welsh Government said it stood ready to continue support Tata’s operations in Wales.
Finance Minister Rebecca Evans said:“We recognise completely the importance of Tata to the community in which it sits, but also to the wider Welsh economy as well in terms of its support to supply chains and the importance of the steel that it produces. We have got a very long track record of supporting the steel industry here in Wales, which we are very proud of.
“If what we are hearing is true, with a potential package from the 海角视频 Government, then that is very much to be welcomed. We have been calling for that for many years and it’s a shame really that it has taken a crisis for that support to crystallise. If there is more that the Welsh Government can be doing to support Tata, and supporting these strategically important businesses, then we look to do that.”
However, in a challenging global marketplace, with Tata loss-making in the 海角视频 and the issue of over supply from Chinese production, it will take far more than just a loan of hundreds of millions to secure its long-term future.
It also requires support to offset high energy costs and investment in greener production, as well as steel being designated an industry of national strategic importance so helping it to win more publicly-funded contracts.