Tata Steel won deal of the century by bluffing Port Talbot’s closure

Tata Steel is accused by MPs of using a bluff to get the government to give it a £500m bailout. This was a “deal for the century”, made on taxpayers’ money.

Union leaders told a parliamentary hearing about Tata’s plans for closing its blast furnaces in Port Talbot in south Wales, which was supported by the Prime Minister — and investing in “green steel,” that the move was a “bargain basement attempt” to switch to low-emissions production and that Tata would instead import steel from its steelworks located in India and The Netherlands.

The House of Commons Welsh Affairs Select Committee has launched an investigation into the government’s backing of a restructuring which will see Tata Steel lay off 2,800 employees.

Thachat Viswanath, the global CEO of Tata Steel denied that the company had bluffed their way into a bailout deal

The MPs heard representatives from the three major unions in Port Talbot say that Tata and they have been working together on a plan to bring Britain’s biggest steelworks to net zero by 2020 by building an electric-arc furnace which is fed with recycled metal alongside an existing blast for virgin feedstock, to continue making high-grade steel.

Tata, however, announced in September that it would build an electric arc-furnace, but also shut down its more labor-intensive blast furnace operation. This was without consulting the unions. Tata announced that the government would support the plan by £500 million despite the large number of job losses that will result.

The committee hearing, which was attended both by Thachat Viswanath Nairendran, global chief executive officer of Tata Steel and Stephen Kinnock (Labour MP for Port Talbot), claimed that Tata’s threat to shut down the steelworks completely was a bluff in order to secure a deal.

Stephen Crabb (former Tory minister and chairman of the Conservative committee) told Narendran Tata got what it wanted. He said, “You do not save the blast-furnace and you do not save the jobs. But you can get the government give you money.” This is the deal of a century.”

Tata will build an electric arc-furnace but shut down its more labour intensive blast furnace operations

Narendran denied this accusation, and said that the alternative plan to the current one was to close the plant, to put the company in bankruptcy, and to withdraw from Britain with the loss 8,000 jobs. He claimed that Tata has invested £5 billion in Port Talbot during the last 15 years. However, the blast furnaces and coal ovens needed an additional investment of £800million and the operation lost £1million per day.

He claimed that the UK government would not be prepared to support Tata Steel’s unsustainable operations and that Tata Steel has outside shareholders who will not be willing to do so.

Tata’s plan, as well as the UK government’s, was said to be a part of their strategy to move toward greener production. Narendran stated that “the existing assets are nearing the end of their life cycle”. Electric arc furnaces have a carbon footprint that is 20 percent less than a blast-furnace. “We have to make a decision.”

Alasdair MacDiarmid is the assistant general secretary for the Community Steel Union. He accused the government of Tata of devising the “cheapest strategy of decarbonisation” in any industrialised country. He claimed that Port Talbot could not fulfill 40% of its order book if it was only using an electric arc iron without having access to virgin steel and metallic iron.

McDiarmid stated that “Tata claims their plan has been tried and tested but they are blazing a trail no one else follows.”