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UPDATE 1-Tata Steel sells UK pipe mills to Liberty House

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LONDON/BENGALURU, July 11 (Reuters) - India's Tata Steel said on Tuesday it had agreed to sell its pipe mills in the north of England to UK-based metals and industrial group Liberty House for an undisclosed sum.

The mills in Hartlepool employ 140 people and have a production capacity of over 250,000 tonnes a year.

Tata Steel, Britain's largest steelmaker, has been selling off parts of its UK business since last year, when it announced talks to merge its British and European steel assets with those of Germany's Thyssenkrupp.

"With this sale, Tata Steel UK will complete its portfolio restructuring to focus on the strip products supply chain linked to Port Talbot," said Bimlendra Jha, CEO of Tata Steel UK.

"The sale is also an important step towards developing a more sustainable future for the rest of our UK business."

In February, Tata signed a 100 million pound deal to sell its speciality steel business to Liberty House, saving 1,700 jobs, mostly in South Yorkshire, northern England.

Under Tuesday's deal, Tata retained ownership of a tube mill in Hartlepool that is supplied with steel coils from the European steel assets that it wants to retain and merge with Thyssenkrupp.

Tata, whose UK business is centered on the steelworks in Port Talbot, Wales, said it will invest 1 million pounds ($1.29 million) in the Hartlepool tube mill, which employs 270 people.

Privately-owned Liberty, which plans to list some of its businesses in 2018, has been snapping up distressed steel assets in Britain and around the world, including in the United States and Australia.

"This step will inspire investments not only in Hartlepool but also in our upstream plate mill at Dalzell (Scotland), and potentially ... at Whyalla in Australia in due course, to give us a fully-integrated world class capability to supply pipeline projects," Liberty's Executive Chairman Sanjeev Gupta.

The Hartlepool pipe mills make heavy-duty steel pipe for the oil and gas sector.

Liberty, which operates together with energy and commodities business SIMEC under the $9.4 billion Gupta Family Group (GFG) Alliance, said it is in talks to secure a support package to recruit more staff for the pipe mills business.

Gupta's Liberty House is one of the largest industrial employers in the UK with a workforce of nearly 5,000 people. Following Tuesday's deal, Tata remains the largest UK steelmaker with a workforce of 8,500 people.

The UK steel sector is emerging from a crisis that saw some 5,000 jobs, a fifth of the workforce, axed in 2015/16. It is estimated that for every steel job saved, four jobs are retained in related industries.

Gupta first hit the headlines last year when he offered to rescue all the distressed UK steel plants owned by Tata, but the Indian group eventually decided against selling its entire UK business in favor of a tie-up with Thyssenkrupp.

($1 = 0.7749 pounds) (Editing by David Evans)