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Tata Steel to close last two blast furnaces at Port Talbot

by SuperiorInvest

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India’s Tata Steel has confirmed it will close the last two blast furnaces at the UK’s largest steelworks later this year as part of a radical restructuring that will see up to 2,800 job losses at the Wales plant.

The decision signals the imminent end of traditional steel manufacturing 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 for the 4,000 workers at Tata’s headquarters in Port Talbot, south Wales, who are expected to be hardest hit by the job losses. Tata employs around 8,000 people across the UK.

Under plans, the company will invest £750m in the restructuring and construction of a lower carbon electric arc furnace on the same site, backed by a £500m government grant.

Tata’s decision follows a similar move by British Steel, which last year said it would close its two remaining blast furnaces and build two electric arc furnaces. He said they could be operational by the end of 2025.

The closures are the latest chapter in decades of decline for the British steel industry and will leave the UK the only major economy without the capacity to make primary steel from iron ore and coal.

Tata will cut approximately 2,500 jobs over the next 18 months, mainly by closing blast furnaces and coke ovens. Another 300 employees could be laid off in the next three years. The company’s UK operations have been losing around £1.5m a day.

TV Narendran, chief executive of Tata Steel, told the Financial Times that the status quo “was not sustainable”.

“The reality is that despite the sacrifices. . . for the employees, the company. . . It is a global and tough industry,” he said.

Tata’s proposals will be put to workers’ consultation, but were condemned by unions, which had presented an alternative plan to keep a blast furnace open until 2032.

The plan would have cost more than £650m, according to people close to the unions.

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”.

Meanwhile, Stephen Kinnock, Labor MP for Aberavon, urged Tata to “come out of the woods” and reconsider his “absolutely devastating” decision.

“Do we really want to be a country, given the dangerous and turbulent world we live in, that is not capable of producing its own steel?” he said.

Port Talbot is Britain’s largest emitter of carbon dioxide. The UK needs the steel industry to decarbonise if the country is to meet its promise to reach net zero emissions by 2050. Electric arc furnaces, which melt scrap steel, consume less carbon but also much less labour.

Tata said it expected the electric arc furnace to be operational in 2027. In the short term, the company plans to import semi-finished steel from its bases in the Netherlands and India.

Tata’s Narendran did not rule out the option of building a “direct reduced iron” plant at Port Talbot in addition to the electric arc furnace.

A DRI plant uses natural gas and potentially the once-available green hydrogen made from renewable electricity instead of coking coal to reduce iron ore. Tata is considering this option for its site in the Netherlands.

However, going down that path would require more investment, as well as gas “available in abundance and at a reasonable price,” he said.

Steel production in the UK has fallen from 24 million tonnes in 1971 to around 6 million tonnes today. The sector employs just under 40,000 people, according to trade body UK Steel. The industry accounts for just 0.1 per cent of Britain’s total economic output, but provides highly skilled manufacturing jobs.

Jonathan Reynolds, shadow business secretary, said ministers had never offered a “serious plan” for the steel industry over the long term.

They had “pushed through a plan that uses millions of taxpayers’ money just to lay off thousands of people and leaves us unable to produce primary steel in the UK,” he said.

The UK government said it was “determined to secure a sustainable and competitive future for the UK steel sector”, adding that it had committed £500m to help transform the Port Talbot site and protect jobs.

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