Tata Steel has revealed plans to create a new leading European steel enterprise with ThyssenKrupp AG.

A Memorandum of Understanding (MoU) has been signed between the two companies, which will see work begin to create a new 50;50 joint venture (JV) - ThyssenKrupp Tata Steel.

The JV would have a pro forma turnover of around £13.2 billion each year, employ 48,000 people and annually ship around 21 million tonnes of flat steel products.

Commenting on the MoU, Tata Steel Chairman N Chandrasekaran said: "The Tata Group and thyssenkrupp have a strong heritage in the global steel industry and share similar culture and values. This partnership is a momentous occasion for both partners, who will focus on building a strong European steel enterprise. The strategic logic of the proposed joint venture in Europe is based on very strong fundamentals and I am confident that thyssenkrupp Tata Steel will have a great future."

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Dr. Heinrich Hiesinger, Chairman, Executive Board, ThyssenKrupp, added: "thyssenkrupp and Tata Steel are creating a sustainable future for their respective European steel activities by jointly forming the planned joint venture. This business combination creates a strong number 2 and is thus much better positioned to cope with the structural challenges in the European steel industry.

"With Tata Steel, we have found a partner with a very good strategic and cultural fit. Beyond a clear performance orientation, we also share the same philosophy of corporate responsibility towards employees and society."

The news was "cautiously" welcomed by UK steel unions Unite, GMB and Community.

In a joint statement, they said: "The steel trade unions cautiously welcome this news and recognise the industrial logic of such a partnership. This would create the second biggest steel business in Europe which could deliver significant benefits for the UK.

"As always, the devil will be in the detail and we are seeking further assurances on jobs, investment and future production across the UK operations. As a priority, we will be pressing Tata to demonstrate their long term commitment to steelmaking in the UK by confirming they will invest in the reline of Port Talbot's Blast Furnace No.5.

"We must also be assured that ThyssenKrupp's pension liabilities will be ring-fenced with a cast-iron guarantee that UK steelworkers will never fund German pensions.

"We are now seeking an urgent meeting with Tata to fully understand their intentions for the UK in the context of the joint venture. We are also making arrangements to bring together senior representatives from across the UK to determine our approach to this significant new development."

(LM)