Tata Steel says it plans to close its Orb Electrical Steels unit in Newport, Wales, after failing to find a buyer for the business.
“The Orb Electrical Steels business has been loss-making for several years as it struggled to compete in the fast-moving market to supply steels used in electricity transformers in which customer requirements have out-stripped the site’s capability,” Tata Steel observes. “Converting the site to create steels for future electric vehicle production would cost in excess of £50 million in a highly competitive market where Tata Steel faces higher-volume competitors both in Europe and globally.”
Tata Steel Europe chief executive Henrik Adam says continued funding of Orb Electrical Steels is not sustainable at a time when the European steel industry is facing considerable challenges. “We saw no prospects of returning the Orb business to profitability in the coming years,” he comments in a note seen by Kallanish.
Orb is one part of Tata Steel’s Cogent Electrical Steels business, which is among the non-core businesses that the Indian steelmaker announced it would divest in May (see Kallanish passim).
The other two parts have secured brighter futures. Cogent Power Inc, in Burlington, Canada, which produces cores for electrical distribution transformers, will be sold to Japan’s FE Shoji Trade Corporation. Surahammars Bruks AB, in Surahammar, Sweden, which makes advanced steels for electric vehicles, meanwhile, will be retained by Tata Steel.
Tata Steel has meanwhile been unable to find a buyer for Wolverhampton Engineering Steels Service Centre, in the UK, and proposes to close it.
Tata says it will take steps to mitigate the impact on employees at the units to be closed, including offering alternative employment opportunities at other Tata Steel sites. Consultations with affected employees and trade unions at both Orb and Wolverhampton will commence shortly.