Thyssenkrupp in talks with rivals over steel business: source

The talks, to be announced as part of a strategy revamp later on Monday, follow a 372 million euro ($402 million) loss that Thyssenkrupp Steel Europe, Germany’s largest steelmaker, reported in the first half of the group’s fiscal year.

The update is expected to accelerate Thyssenkrupp’s dismantling, a process that started last year when the group essentially put most of its divisions, including car parts, warships and plant building on the block.

Shares in Thyssenkrupp, which have lost nearly two-thirds of their value over the past 12 months after a raft of profit warnings and dwindling investor confidence, were 7% higher at 1147 GMT.

Ever since a strategy u-turn a year ago, which saw Thyssenkrupp dropping plans for a joint venture with India’s Tata Steel (TISC.NS) in favour of a sale of its prized elevator unit, the group continued the merits of steel consolidation.

Sources told Reuters that contact between Thyssenkrupp and Tata Steel never broke off and that both were still in talks about consolidation.

Business paper Handelsblatt said that Thyssenkrupp was also in discussions with Sweden’s SSAB (SSABa.ST) and China’s Baoshan Iron & Steel (Baosteel) (600019.SS) and that both were interested in a majority of the German firm’s steel unit.

Thyssenkrupp, Tata Steel Europe and Baosteel declined to comment as did SSAB, whose shares were also 7% higher. Tata Steel Europe had no immediate comment.

Knut Giesler, who heads powerful union IG Metall in North Rhine-Westphalia, where Thyssenkrupp is based, said workers would prefer a deal with German peer Salzgitter (SZGG.DE) or other companies from the Saar region in southwestern Germany.

“If you are teaming up with a foreign partner the majority needs to stay in Germany,” Giesler said.

Labour representatives have immense clout at Thyssenkrupp and hold half the seats on the group’s supervisory board and Giesler said the union would not approve further job cuts at Thyssenkrupp Steel Europe.

Thyssenkrupp’s supervisory board, in a meeting scheduled for Monday, is also expected to discuss the auction of Plant Technology, the division building chemical, fertiliser and other industrial plants.