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Tata Steel UK has announced its decision to proceed with a major transformation of Britain’s largest steel plant at Port Talbot, South Wales, towards the Indian steel giant’s Green Steel plan in Britain.
The transformation is described as the single-largest investment in UK steelmaking in decades following detailed terms with the UK government on a proposed grant package to support the £1.25 billion investment, safeguard its long-term future, secure 5,000 jobs directly at Tata Steel, whilst creating more indirect jobs in engineering and construction, and reducing CO2 emissions by 5 million tonnes each year. The company says the transformation will also address the ageing profile of the existing heavy end assets and declining reliability that has resulted in challenging operating conditions, lower volumes, and higher costs of production and maintenance.
Following a meeting with the UK Steel Committee last week, Tata Steel’s CEO and Managing Director T.V. Narendran said: “Having looked carefully at all the options over the past seven months in consultation with union representatives, we have decided to proceed with our proposed restructuring and transition. This is the most viable proposal, in contrast to the unions’ unaffordable plan which has high inherent operational and safety risk.
“Our proposal secures a long-term future for the business and preserves the majority of jobs in the UK. We will continue to work with the trade unions over the following two weeks to agree a memorandum of understanding on the future of the UK business and the impact on our people. Tata Steel is committed to creating a low-CO2 steel business at the heart of a green industrial ecosystem in Wales and the wider UK to safeguard steel supplies and create economic opportunities for generations to come.”
During the consultation process, Tata Steel revised its original proposal, agreeing to continue to operate the Hot Strip Mill through the transition period. The company also reached alignment with the UK Steel Committee that production on the coke ovens and one blast furnace needed to cease by mid-2024.
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Following a detailed analysis, the company will proceed with its proposal in which Port Talbot’s two blast furnaces, known as No. 5 and No. 4, will close by end of June and latest by the end of September, respectively. Following the closure of Blast Furnace No. 4, the remaining heavy end assets will wind down, and the Continuous Annealing Processing Line will close in March 2025. A Voluntary Redundancy Aspiration process will be launched across Tata Steel UK from the 15th of May 2024.
Tata Steel UK’s CEO, Rajesh Nair, said: “We have spent the last seven months openly and transparently sharing detailed business information, asset condition, maintenance plans and market forecasts with our trade union colleagues and advisers. While we have agreed to keep the Hot Strip Mill running through the transition, the unions’ plan presents significant financial, operational and safety challenges, and delays the transition to green steel by two years. We have concluded that it is not feasible to accept their plan, and it is not affordable.
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“This is a difficult period of change for our people, and we will do our upmost to support them. Tata Steel has always been a responsible, long-term and patient investor in its UK business, and we are committing significant additional capital to ensure that we can create an operationally, financially and environmentally sustainable business for the future."
The steelworkers’ unions in Wales have said there could be a fight ahead over expected job losses of around 2,800.