The Business Secretary and the lead representative of the UK’s three steel unions have welcomed an ‘important step’ for the country’s steel industry, after Tata Steel Ltd and Thyssen Krupp signed a formal agreement that could secure the future of the Port Talbot steel plant.

Greg Clark and Roy Rickhuss, chairman of the National Trade Union Steel Co-ordinating Committee, said the deal between Tata and Thyssen Krupp had the potential to protect the long-term future of steel-making at Tata’s site in South Wales, its 4,000 jobs and the wider supply chain.

The site is home to the Indian conglomerate’s strip-steel business. The Government and unions said they welcomed the move, as long as commitments to safeguard jobs and extend blast-furnace operations over the long term at Port Talbot were maintained. Reassurances are also being sought on relining the site’s second blast furnace.

The memorandum of understanding signed between Tata and Thyssen Krupp marks the latest stage in the development of a joint venture between the companies to build a pan-European steel enterprise. The company will become Thyssen Krupp Tata Steel.

Business Secretary Greg Clark said: “The Government has been working hard with the unions to secure a sustainable future for Tata Steel in the UK, its 4,000 employees at the Port Talbot site and its supply chain.

“The agreement between Tata Steel and Thyssen Krupp is an important next step in establishing their shared ambition for Port Talbot as a world-class steel manufacturer, with a focus on quality, technology and innovation.”

Mr Rickhuss, who is also general secretary of Community, 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 steel-making in the UK by confirming they will invest in the reline of Port Talbot’s Blast Furnace No.5.”

The joint venture comes after the recent conclusion of Tata’s discussions with the British Steel Pension Fund, the Pensions Regulator and the Pension Protection Fund about a plan to manage its pension liabilities.

This enabled a Regulatory Apportionment Arrangement to be reached, giving pension-scheme members the opportunity to transfer to a new scheme.