Tata Steel has expressed concerns about the impact of the political tussle between the Conservatives and the Labour Party in the run up to the general elections on the future direction of its UK operations and vowed to press on with its plans to close down ageing blast furnaces.

The company observed that the £1.25 billion investment programme to build a low carbon steelmaking facility, which includes a government grant of £500 million, may be “put in peril” because of the policy differences expressed by two main political parties.

While the grant was cleared by the incumbent Conservative Party government in September last year, the formal agreement between the company and the government is yet to be signed. With less than four weeks to go before the UK goes to the polls, noises are being made from the Labour Party to put the closure decision on hold till the poll outcome is clear.

On Monday, Labour Party leaders visited Port Talbot, Wales, where the heavy end assets of Tata Steel UK (TSUK) are located, and met the company management and Union representatives. The Labour Party favours a plan to continue with at least one of the blast furnaces (BF) till end of the decade while also building the electric arc furnace (EAF) according to the green transition plan.

In a communication to the stock exchange this morning, Tata Steel said it confirms that it will continue with the announced closure of the heavy end assets and restructuring programme at Port Talbot in the coming months.

As part of the plan, TSUK has already closed the coke oven unit in March and it is scheduled to shut down BF 5 at the end of this month. A source indicated the process to wind down BF 5 has already started. The BF 4 is slated to be decommissioned by the end of September. The closure will lead to 2,800 job cuts which the Unions and a section of the Labour Party is opposing.

Stephen Kinnock, the Labour candidate in the forthcoming election for the Aberafan Maesteg constituency which includes Port Talbot, posted on social media tagging Jonathan Reynolds, the shadow business secretary: “They came to PT to convey a clear message to Tata about future of our works & Labour’s opposition to any deal that uses £500 mil of taxpayers’ money to make 000s of steelworkers redundant.”

Tata Steel, which has poured in £6.8 billion since acquiring Corus in 2007 to keep the UK business operational, reminded that it worked hard for the last three years to develop a sustainable future for TSUK and Port Talbot.

“We are, therefore, apprehensive reading UK media reports suggesting that the £1.25 billion investment, the largest in many decades in British steelmaking, may be put in peril due to policy differences expressed by the Conservative and Labour parties during the ongoing election period,” the company said in a statement.

Describing the Tata group, which Tata Steel is a part of, as one of the largest private sector employers of the UK, the company urged and requested “the current and the incoming government post-elections to adhere to and safeguard the agreed terms of the £500 million package of support for the EAF project announced in September 2023”.

Tata Steel had earlier rejected a multi-Union proposal to keep one BF operational saying it would call for another £1.6 billion in additional costs, create significant operational and safety risk and delay the EAF by two years. “The current heavy end assets of Port Talbot are nearing their end of life, are operationally unstable and are resulting in unsustainable financial losses,” the company said.

“We are, therefore, concerned with the UK media reports since yesterday as further political uncertainty on the timing and form of the grant will place the EAF project and the long-term future of steelmaking at Port Talbot at significant risk.”

To mitigate the impact of the restructuring, a ‘generous voluntary redundancy programme’ has been developed and is being offered to the impacted employees.