Tata Steel UK

The unions' alternative plan has been rejected due to additional costs of £1.6bn

Tata Steel UK has announced that it will continue to implement its plan to shut down blast furnaces at its Port Talbot steel mill and switch to electric arc furnace (EAF) production. The company said in a statement.

After seven months of formal and informal discussions at the national level with British trade unions, the company announced that it would close blast furnace No. 5 by the end of June this year and No. 4 by the end of September.

Following the closure of BF No. 4, other heavy assets will be phased out, and the continuous annealing line will close in March 2025.

The unions’ proposal to maintain one blast furnace during the transition would have resulted in additional costs of at least £1.6 billion, including higher operating and capital expenditures. Tata Steel also believes that this would have created a significant operational and safety risk and jeopardized future business continuity.

«After carefully considering all options over the past seven months in consultation with trade union representatives, we have decided to proceed with our proposed restructuring and transition,» said Tata Steel CEO T. V. Narendran.

The company also expects to place an order for equipment for the EAF by September this year and start construction of the EAF by August 2025. In addition, Tata has accepted a revised connection offer from National Grid and will finalize the documents in the coming days. This will ensure that the company has the energy infrastructure in place to commission the EAF on schedule by the end of 2027.

Tata Steel UK reported that it has already secured most of the semi-finished products for re-rolling, such as slabs and hot-rolled coils, required during the transition, to ensure uninterrupted service to its operations and customers. The company has agreed with Associated British Ports on details of expanding slab handling and stockpile storage capacity at ports in South Wales.

In addition, Tata has agreed detailed terms with the UK government for a proposed £1.25 billion investment support package, with final documents expected to be finalized in the coming weeks.

Starting May 15, 2024, Tata Steel UK will launch a voluntary redundancy process. Over the next 2 weeks, the company will continue discussions with trade unions on a possible memorandum of understanding on the future ambitions of the business and the impact of the restructuring on employees.

As GMK Center reported earlier, the British government agreed on a £500 million ($620 million) support package for the company’s green transition. Tata Steel was expected to invest £1.25 billion, including a government grant, in the EAF to make steel production more environmentally friendly. Trade unions warned that the deal would have «devastating consequences.»