The owner of Port Talbot steelworks has confirmed that its two blast furnaces will shut down, in what unions have condemned as an “absolutely devastating” blow that will cost up to 2,800 jobs directly and many more in the south Wales community.
Port Talbot’s parent company, the Indian-owned Tata Steel, said it was not “feasible or affordable” to adopt trade union proposals to continue production at the loss-making plant during a transition to greener, cheaper steelmaking operations.
Amid fury and despair in the Welsh town, Tata could now face strikes at the plant, according to Unite, one of three unions representing steelworkers, which said it was considering industrial action.
On Friday, after trading on the stock exchange ended in Mumbai, Tata officially confirmed its plans, which will result in most of the plant’s 4,000 workers losing their jobs. Of the positions slated for redundancy, 2,500 are expected to go within 18 months.
About 200 positions will be saved by maintaining operations at the site’s hot strip mill, which rolls steel slab, while some temporary jobs will be created in the construction of new electric arc furnaces (EAFs).
The cuts come despite the government providing £500m of financial backing for Tata’s £1.25bn four-year plan to build EAFs to produce steel from scrap metal, rather than virgin steel which is made from scratch.
Keir Starmer urged the government to look again at the union’s proposals to avoid compulsory redundancies, which the Labour leader said were “viable” despite an estimated extra cost of £683m. “This government plan could lead to the end of steel in the United Kingdom,” he said. Labour has said it would invest £3bn in the transition to green steel.
Rishi Sunaksaid the government’s smaller investment showed it was “absolutely committed” to British steelmaking. However, the Welsh first minister, Mark Drakeford, said he had written to Sunak asking for urgent talks about the furnace closures but had been told the prime minister was “not available”.
The blast furnace closures, together with similar proposals at the Chinese-owned British Steel plant in Scunthorpe, would leave the UK as the only G20 economy without the ability to make steel from scratch. Instead, the UK will produce recycled product, using the surplus of scrap steel that is currently exported.
Tata, which says the plant is losing £1m a day, said it would seek voluntary redundancies where possible and would provide £130m to fund severance payments, community programmes, skills training and job-seeking initiatives.
The company rejected a proposal put forward by the Community and GMB unions that would have kept the blast furnaces open, protecting jobs during the transition.
The two unions said that governments in France, Germany and Spain were all “committing billions to secure the future of their strategically important steel industries, and our government must show similar ambition”.
They added: “More than 3,000 jobs and the future of British steelmaking are at stake. It is an absolute disgrace that Tata Steel, and the UK government, appear intent on pursuing the cheapest instead of the best plan for our industry, our steelworkers and our country.
“It’s unbelievable any government would give a company £500m to throw 3,000 workers on the scrapheap, and our government must re-evaluate its miserly offer to support investment at Tata Steel.”
Community said the closure was “absolutely devastating” to the local economy and called Tata’s plan “decarbonisation on the cheap”.
Amid a schism between trade unions representing steelworkers, the GMB and Community also lashed out at Unite, which had put forward a separate £12bn plan to revive UK steelmaking over 12 years that they described as “discredited fantasy”.
The Unite Wales secretary, Peter Hughes, said: “Our members are angry and frustrated and will do everything in their power to preserve steelmaking at Port Talbot including taking industrial action.”
Sunak, asked about the Port Talbot announcement, said the government was “absolutely committed” to British steelmaking.
TV Narendran, Tata Steel’s global chief executive and managing director, 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.
“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.”
Tata estimates that converting Port Talbot to EAFs will reduce the UK’s carbon emissions by about 1.5%. The technology also requires far fewer workers than blast furnaces, meaning the plant is unlikely to increase staffing levels after the transition.
The company has indicated that the plant could not have continued to operate without the transition, which would ultimately have threatened its entire UK operation, employing 8,000 people, which relies on supplies from Port Talbot.
In theory, Tata Steel and the government could invest in direct reduced iron (DRI) steelmaking, as other countries in Europe have done, to produce iron for the steelmaking process.
The technology uses gas at present but can be converted to run on zero-carbon hydrogen.
