Tata Steel, the India-owned steel giant, announced on Friday that it will close its two blast furnaces in Britain by the end of this year, putting up to 2,800 jobs at risk at its Port Talbot steelworks in Wales. The company said the decision was part of its plan to turn around its loss-making UK steelmaking business by switching to lower carbon electric arc furnaces, a proposal backed by 500 million pounds ($634.10 million) of government money.
Reasons for the closure
Tata Steel said it was facing several challenges in the UK, including high energy costs, low domestic demand, cheap imports and environmental regulations. The company said it had been losing 1 million pounds a day in its UK operations and needed to transform at pace to build a sustainable business for the long-term.
The company said the switch to electric arc furnaces, which use recycled scrap steel instead of iron ore and coal, would reduce its carbon emissions by 1.5%, as Port Talbot’s coal-fired plant is the country’s biggest single carbon emitter. The company also said it would offer a 130 million pound support package to help affected employees retrain and find new jobs.
Reactions from unions and government
The trade unions Community, Unite and GMB said they rejected the Tata Steel plan and would consult their members on next steps, including industrial action. They said the closure of the blast furnaces would severely diminish the UK’s steel industry and its ability to produce virgin steel, which is needed for high-quality products such as cars and defence equipment.
The unions also accused the government of failing to support the steel sector and called for urgent action to protect jobs and communities. They said the government should intervene to ensure that Tata Steel does not receive any public money unless it commits to keeping the blast furnaces open.
The government said it was disappointed by Tata Steel’s announcement and would work closely with the company, unions and local authorities to support workers and secure a future for steelmaking in the UK. The government said its funding package for Tata Steel was conditional on the company delivering on its commitments to invest in cleaner technology, safeguard jobs and maintain production levels.