Tata Steel rejected a union plan to keep a blast-furnace open at the Port Talbot Steelworks. This ended any hope of avoiding up to 2,800 job cuts.
On Thursday, unions in London met with the company to plead with them not to proceed with their proposals that will end the ability to produce steel from iron ore south Wales in September and result in thousands of job loss.
The first blast-furnace will close by the end of the month, followed in September by the second and “heavy end” which produces steel from iron. Tata Steel announced that it would launch a voluntary redundancy program on 15 May.
In January, Tata Steel, owned by Indians from India announced the closing of two UK blast furnaces. This was a serious blow for Port Talbot. Steelworks dominate the town’s economy and are a major employer.
Tata intends to replace two blast furnaces, which produce molten steel from iron ore, with electric arc furnaces. Tata said on Thursday that it plans to order the furnace equipment in September and start construction by August 2025.
Electricity is much more environmentally friendly than a chemical reaction which produces carbon dioxide. The site will also see a substantial investment of £1.25bn. The newer technology, however, will require a lot fewer employees.
About £500m will be spent by the government to support the shift to new furnaces, which can reduce UK emissions by around 2% when renewable electricity is used.
The union plan would’ve kept a blast-furnace in operation, while building an electric-arc furnace. This would have saved jobs.
Tata Steel’s chief executive TV Narendran said, “After carefully examining all options in consultation with union representative over the last seven months, we have decided that our proposed restructuring, and transition, will proceed.” This is a more viable plan than the unions’ expensive plan that carries high operational and safety risks.
Roy Rickhuss is the General Secretary of the Community Union. He said that Tata’s decision to sell steel was “a destructive bad deal” for the industry. However, he added, “this [is] not over”, as the union still awaits the vote by its members on strike action.
Rickhuss stated that he did not accept the company’s claim that our plan was expensive. “In reality, the plan would have brought the company back to profitability, and additional capital expenditure required to make it real could have been funded with an additional £450m by the government. This is a small amount compared to the investments other European countries have made in their domestic steel industry.”
The two UK blast furnaces, located in Scunthorpe and run by British Steel , a Chinese company, are also scheduled to shut down. The UK will be left without the ability of making primary steel using iron ore. Instead, electric arc furnaces are going to rely on scrap.
Tata’s confirmation will make industrial action more likely. Community, the largest union of steelworkers in the world, asked its members to support a ballot that would allow them to go on strike. Both Community and GMB (which also represents steelworkers) will close their ballots by 9 May.
Unite, a union in the UK, has been pressing for an more ambitious plan to protect jobs and include energy subsidies. Tata has also rejected the plan which relied on government support. Steelworkers at Unite have already voted for industrial action.
The Unite General Secretary, Sharon Graham said: “Tata uses our outgoing government inadequacies for easy money and to boost its other operations, at the expense UK jobs and national interest.”
Stephen Kinnock is the Labour MP of Aberavon where the Port Talbot Steelworks are located. He said that the closure would “have a devastating effect on our local community” as it would mean the exportation of well-paid Port Talbot jobs to India despite India’s steel factories having a much higher carbon footprint.
Tata, the UK’s largest steel manufacturer, employs about 8,000 people in the UK. About half of them are based at Port Talbot.