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India’s Tata Steel has confirmed it will close the last two blast furnaces at the UK’s largest steelworks in Wales by the end of this year as part of a sweeping restructuring that will result in the loss of up to 2,800 jobs.
The decision signals the looming end of traditional steelmaking in Britain, an industry in which the country once led the world, and drew fierce criticism from unions and opposition party politicians.
It is a devastating blow to the 4,000-strong workforce at Tata’s main site at Port Talbot in south Wales, which is expected to bear the brunt of the job losses. Tata employs about 8,000 people across the UK.
Tata said on Friday that it would invest £750mn towards the restructuring and building of a less carbon-intensive, electric arc furnace on the same site, backed by a £500mn grant from the UK government.
Roughly 2,500 jobs are set to go over the next 18 months through the closure of the blast furnaces and coke ovens. A further 300 staff could be axed over the next three years, including at one of the company’s processing facilities at Llanwern.
T V Narendran, Tata Steel’s chief executive, said the “course we are putting forward is difficult, but we believe it is the right one”.
“Having invested almost £5bn in the UK business since 2007, we must transform at pace to build a sustainable business in the UK for the long term,” he added.
Tata’s proposals will be put to worker consultation but were condemned by unions, which had put forward an alternative plan to keep open one blast furnace until 2032 in a bid to limit job losses.
Roy Rickhuss, general secretary of the Community steel union, urged the company to reconsider, describing the decision as “unacceptable” and “devastating for Port Talbot and the wider steel industry”.
Unite general secretary Sharon Graham said the union was “ready to use everything in its armoury to defend steel workers and our steel industry”.
Meanwhile, Stephen Kinnock, Labour MP for Aberavon, urged Tata to “pull back from the brink” and reconsider its “utterly devastating” decision.
“Do we really want to be a country, given the dangerous and turbulent world in which we live, that isn’t able to produce its own steel?” he said.
Tata, which has owned the UK operations since 2007, said the restructuring was intended to “reverse more than a decade of losses”. The company has been losing about £1.5mn a day as it has struggled with high energy and raw material costs coupled with falling steel prices.
Port Talbot is Britain’s biggest single emitter of carbon dioxide and the industry must decarbonise if the UK is to meet its pledge to reach net zero by 2050.
Electric arc furnaces, which melt down scrap steel, are less carbon intensive but also much less labour intensive. Tata said it expected the electric arc furnace to be up and running by 2027.
In the near-term, the company plans to import steel slabs or semi-finished steel from its bases in the Netherlands and India to supply UK manufacturing sites. Tata said it would spend more than £130mn on support for affected employees, including skills training.
The company’s decision to shut down the blast furnaces follows a similar move by British Steel. The Chinese-owned group last year said it would close the two remaining blast furnaces at its site in Scunthorpe in Lincolnshire and build two electric arc furnaces. It said they could be operational by late 2025.
The closures are the latest chapter in decades of decline for Britain’s steel industry and will leave the UK as the only major economy without the ability to make primary steel from iron ore and coal.
Steel production in the UK has fallen from 24mn tonnes in 1971 to about 6mn tonnes today, while employment in the sector has dropped to just under 40,000, according to trade body UK Steel. The industry makes up just 0.1 per cent of Britain’s total economic output but provides highly skilled manufacturing jobs, with wages above the national average.
Jonathan Reynolds, shadow business secretary, said ministers had never offered a “serious plan” for the steel industry in the long term.
They had “pushed a plan that uses millions of taxpayers’ money only to make thousands of people redundant and leaves us unable to produce primary steel in the UK”, he said.
The government said it was “determined to secure a sustainable and competitive future for the UK steel sector”, adding that it had committed £500mn towards helping transform the Port Talbot site and protecting jobs.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
