Tata Steel to shut hot metal production at Port Talbot by end-2024, install EAFs in 2027

Tata Steel UK will close the blast furnaces (BFs) and coke ovens at its Wales-based Port Talbot steelworks before the end of this year, and install new electric-arc furnaces (EAFs) in 2027, Fastmarkets learned on Friday January 19.

The announcement was made by the company on Friday, after a meeting with representatives of the trade unions in London on the previous day.

The rumors about hot-end closure at the Port Talbot site first emerged in autumn 2023, and on January 19 Tata Steel UK confirmed its plans to shut the BFs down, but keep the hot-strip mill operational.

“Port Talbot’s two high-emission blast furnaces and coke ovens would close in a phased manner, with the first blast furnace closing around mid-2024 and the remaining heavy end assets would wind down during the second half of 2024,” the company said in its press release.

The hot-strip mill will remain operational through the proposed transition period and in future. On top of that, the company’s downstream and steel processing centers would also keep working.

The steel slab for production would be supplied from Tata Steel plants in the Netherlands and India, as well as “other select strategic suppliers,” the release said.

Port Talbot green transition
Tata Steel plans to replace the existing blast-furnace basic-oxygen furnace (BF-BOF) production route at Port Talbot with the more eco-friendly EAF route, Fastmarkets reported.

The total capital costs of Port Talbot’s green transformation would amount to £1.25 billion ($1.59 billion) including a £500 million government loan that Tata Steel UK secured previously.

The combined capacity of the new EAFs at Tata Steel would be around 3 million tonnes of crude steel per year.

Tata Steel pointed out that the new EAF would be fed by predominantly UK-produced scrap. That means that the company would need to buy high-quality scrap grades with lower impurities that are suitable for flat steel production.

The UK is a net scrap exporter, but with new EAF-based steelmaking capacities coming online, it could become an importer of certain grades, sources suggested.

Currently, the UK is one of the largest exporters of steel scrap in the world, after the EU-27 and the US, with 2022 outflows reaching 8.24 million tonnes, according to the Bureau of International Recycling (BIR). In January-June 2023, the UK exported 3.68 million tonnes of steel scrap, down 10.5% from 4.11 million tonnes in the same period of 2022, according to the BIR.

The new EAFs at Port Talbot are expected to be commissioned in 2027, and the proposed investment would reduce the site’s carbon emissions by around 5 million tonnes per year.

According to Fastmarkets’ information, Port Talbot is equipped with two BFs with a combined capacity of 5 million tpy and two BOFs with a capacity of around 4.8 million tpy. The site at Port Talbot produces hot-rolled and cold-rolled coil, as well as tubes.

According to Tata Steel UK’s press release, the company has rejected the proposal of the UK multi-trade union representative body (UK Steel Committee) to keep one of its BFs at the Port Talbot site operational during its transition toward low-carbon production.

Notably, Tata Steel pointed out that such decision would not be financially feasible.

Unions’ reaction; strike possibility looms
The hot flow closure at Port Talbot would potentially result in 2,800 jobs cuts, the company said, with 2,500 of that coming within the next 18 months.

The company said it would support employees affected by the transformation plan and, jointly with the UK and Welsh government, established a transition board with £100 million funding for short-term support and long-term economic regeneration, according to the company.

Trade unions have expressed their disappointment over Tata’s decision to proceed with the BF closures and warned of possible industrial action.

“This is of course extremely disappointing. In one area, the company did accept the multi-union recommendation, which is to keep the hot-strip mill open to roll slab over a transition period, supporting hundreds of jobs there, but Tata have rejected our broader proposals to safeguard production capacity and protect jobs,” the steel unions Community, Unite and GMB said in a joint statement on January 19, seen by Fastmarkets.

“Unite is ready to use everything in its armory to defend steel workers and our steel industry. We have detailed research demonstrating how and why Tata should be expanding UK steel production in line with growing demand, not slashing its workforce. We have secured funding from a future Labour government that could do this. Tata’s plan to close the blast furnaces is simply industrial vandalism on a grand scale,” Unite general secretary Sharon Graham said.

The Community and GMB trade unions said they do not accept Tata Steel’s rejection of the multi-union plan to keep BFs operational during the transitional period.

The unions said they will consult on next steps, stressing that “all options to protect jobs are on the table, including industrial action.”

Lee Allen in London contributed to this report