Tata Steel has confirmed it will close the blast furnaces at its Port Talbot steelworks and cut up to 2,800 jobs. The hot strip mill will continue to operate through the proposed transition period, while downstream units will source imported steel feedstock from Tata Steel plants in the Netherlands and India.
The first of the two BFs will close around mid-2024, with the second unit and coke ovens shutting by year-end. The proposal also includes a wider restructuring across the company, including the intended closure of the Continuous Annealing Processing Line (CAPL) in March 2025. The new electric arc furnace is to be commissioned in 2027.
Of the affected jobs, around 2,500 will be impacted in the next 18 months, with a further 300 impacted in the next three years. This could include the potential “consolidation and rationalisation” of cold rolling assets in Llanwern once the required investments are completed at Port Talbot, Tata says.
Following discussions with the UK Steel Committee, Tata agreed to revise its proposal and continue to operate the hot strip mill.
However, it commissioned an independent study that concluded continued blast furnace production while constructing the new EAF is not feasible. This is because of projected operating costs, the risks of building an EAF in an already operating steel melt shop, and the near end-of-life condition of several heavy end assets.
“The course we are putting forward is difficult, but we believe it is the right one,” Tata chief executive T V Narendran says in a note seen by Kallanish. “Having invested almost £5 billion [$6.3 billion] in the UK business since 2007, we must transform at pace to build a sustainable business in the UK for the long-term. Our ambitious plan includes the largest capital expenditure in UK steel production in more than a decade, guaranteeing long-term, high-quality steel production in the UK and transforming the Port Talbot facility into one of Europe’s premier centres for green steelmaking.”
The proposal to invest in an EAF, predominantly fed by UK-produced scrap, mirrors the successful installation of such low-carbon production facilities in other major steel producing markets such as the US. These have cut emissions whilst guaranteeing production of complex, high-quality steel, Tata Steel says.
“On completion, the programme would transform the competitiveness of Tata Steel UK, secure most of its capability in terms of end products, whilst cutting its carbon emissions by about 85% and the UK’s overall carbon emissions by about 1.5%. The proposal to use UK-sourced scrap as the raw materials for future steelmaking would also maintain the country’s self-sufficiency as almost all of the raw materials for the current blast furnaces need to be imported,” the firm adds.
The steelmaker is offering affected workers a £130m support package including redundancy terms, skills training, community-support programmes and job-seeker initiatives. It has also set up jointly with government a £100m dedicated Transition Board to support affected employees.
Reacting to the news, the GMB and Community trade unions have said “all options” are on the table to protect jobs, including industrial action. “It is an absolute disgrace that Tata Steel, and the UK Government, appear intent on pursuing the cheapest instead of the best plan for our industry, our steelworkers and our country,” they note in a joint statement. “Tata Steel and the UK Government must reconsider their positions in order to safeguard the future of British steelmaking, and head off a major industrial dispute.”
They also criticised Unite the Union for undermining the multi-union proposal by “unilaterally campaigning for discredited fantasy solutions”, urging it to return to cooperating.
Minister for the Economy of Wales Vaughan Gething said: “It is by now clear that the case set out for a future that does not require the scaling back covered in today’s announcement has not been fully explored. A key recommendation, that of operating one blast furnace for a significantly longer period was both economically convincing and underpinned a fair and just transition for TSUK [Tata Steel UK]. This proposal highlighted that the Company could have maintained a significant workforce whilst remaining commercially viable.”
“As Tata Steel has stated, any agreement is subject to relevant regulatory approvals, information and consultation processes, and the finalisation of detailed terms and conditions. We urge the Company not to make any irreversible choices based on the current levels of UK Government support,” he added.
Adam Smith | Poland