 "Tata Steel")
Tata Steel announced on Friday that it will shut down its two blast furnaces at Port Talbot Steelworks in Wales, UK, a move that may affect up to 2,800 jobs.
The company said the restructuring of the UK business – which entails moving to electric arc furnace technology – was intended to reverse more than a decade of losses and its transition from the legacy blast furnaces to a more sustainable, green steel business.
“The course we are putting forward is difficult, but we believe it is the right one. Having invested almost 5 billion pounds in the UK business since 2007, we must transform at pace to build a sustainable business in the UK for the long-term,” said T V Narendran, chief executive officer and managing director, Tata Steel.
“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,” he added.
Tata Steel acquired Corus in a 6.2 billion pound deal in 2007 and the UK operations have mostly been a drag. The company disclosed that it has invested 4.7 billion pound in its UK business since it acquired the business. This includes improvements to the UK steelmaking operations and processing sites, as well as covering financial losses and pension restructuring costs.
In addition to this, Tata Steel has provided additional capital support to service Tata Steel UK’s share of debt. Inclusive of that, Tata Steel has invested 6.8 billion pound in Tata Steel UK, the company said.
More From This Section
The announcement on blast furnaces closure follows a discussion with the UK multi-trade union representative body (UK Steel Committee) and its advisors after a joint investment package with the UK government amounting to 1.25 billion pound was agreed upon in September last year. The government grant amounts to 500 million pound and Tata Steel plans to invest 750 million pound.
Tata Steel said that it had carefully considered the unions’ endorsed proposal for maintaining a single blast furnace. Having considered it, Tata Steel has agreed to adopt elements of it, but considers that continued blast furnace production was neither “feasible” nor affordable”. The company will now commence statutory consultation on the proposed restructuring plan.
Under the plan, up to 2,800 employees are expected to be potentially affected, out of which around 2,500 roles would be impacted in the next 18 months. Tata Steel expects a further 300 roles could be impacted in three years, which could include the potential consolidation and rationalisation of cold rolling assets in Llanwern once the required investments are completed at Port Talbot.
Tata Steel UK employs over 8,000 people, including at Port Talbot.
Trade unions in the UK – Community and GMB – reacted sharply to the announcement from Tata Steel. In a statement, the unions said: “We will now consult our members on the next steps and all options to protect jobs are on the table, including industrial action.”
Narendran, in his statement, said, “We recognise this proposed restructuring would have a major impact on the individuals and communities concerned, whom we will support with dignity. In consultation with our union partners, Tata Steel will offer a comprehensive support package to mitigate the impact of any anticipated job losses including helping employees to retrain and find new jobs.”
Tata Steel said it would endeavour to maximise voluntary redundancies and proposes to commit in excess of 130 million pound to a comprehensive support package for affected employees, including redundancy terms, community programmes, skills training and job-seeking initiatives. This is in addition to the 100 million pound funding for the Transition Board set up with UK and Welsh governments to support affected employees, contractors and communities.
