A STEEL company says it will fight to strengthen North-East plants following the collapse of sell-off proposals.

Tata Steel says it remains committed to its loss-making Long Products division, which employs about 750 workers in the region, after US billionaire Gary Klesch walked away from talks.

Mr Klesch had been in discussions with Tata for nearly a year, and was believed to be close to firming up a deal.

However, the former steel mill electrician’s Klesch Group has confirmed negotiations have now ended, to the shock of Tata bosses, after the American claimed the Government was not doing enough to protect jobs through failures to stop Chinese imports and lower energy prices.

Mr Klesch’s retraction came just hours after Tata made Long Products a standalone wholly-owned subsidiary in its European operations, which it hopes will help attract investor funding while supporting the buying of raw materials and the selling of its products.

Long Products runs a special profiles plant in Skinningrove, east Cleveland, which provided bulb flats to weld plates together on the £6.2bn HMS Queen Elizabeth aircraft carrier, and the Teesside Beam Mill, near Redcar, which supplied the new World Trade Center site, in New York.

Reacting to Mr Klesch’s pull-out, a spokesman said: “Tata Steel remains focused on supporting the Long Products business.

“It is entering a new chapter as a wholly-owned subsidiary of Tata Steel UK Limited and Tata will continue to seek a sustainable future for the business.

“The move will allow the business to combine the strengths of Tata Steel with a flexible and more focused operational approach.”

Despite its surprise at Mr Klesch’s announcement, the spokesman said his reversal had stirred industry worries, most notably over energy costs and imports, which Tata hoped would jolt the Government into action.

Explaining his turnaround, Mr Klesch said: “What is the industrial policy when it comes to energy or when it comes to the massive dumping of Chinese steel?

“No-one seems to care; the industrial side is hurting.”