Tata Steel has hinted at a higher investment in the UK amid calls from the unions for a bigger commitment from the company in the backdrop of a changing political landscape in the country.

The company has committed to build a 3-million-tonne environment friendly electric arc furnace for £1.25 billion, which includes a government grant of £500 million, after closing down heavy end assets (coke oven and blast furnaces). The process will render 2,800 workers jobless, triggering protests from unions who want the Tatas to make a bigger commitment to save jobs.

The Labour Party, which came to power in the UK this month, is keen that the number of redundancies go down. It is willing to offer more to the UK steel industry than the previous Conservative government which promised the grant to the Tatas, a higher financial assistance of £3 billion.

At the company’s annual general meeting, many shareholders asked how the change in the UK political landscape was going to impact the restructuring plan undertaken by TSL. Replying to them, N Chandrasekaran, chairman of the company and the Tata group, assured that there would not be any change in direction.

“I must say we have always had very good discussions with both the previous and the current governments. And we have been working very closely with the government, the unions and the local govt in Wales. And everybody is working together to make sure the project is on track. And we don’t see any change in direction,” the chairman said.

However, he also added that, “…at the same time we are constantly looking at how we can not only deliver to our downstream product commitments but also any other expansion opportunities with the right financial metrics so that we are able to serve the market, customers and also keep the employment.”

While Chandrasekaran did not elaborate, the comment suggests that TSL would explore more investment in the downstream segment, producing more value-added materials for the customers. The downstream operations will process the steel produced by the proposed EAF, the upstream operations.

He also assured the shareholders that the UK business would start making a financial turnaround from the third quarter onwards.

India road map

Sharing the roadmap for the domestic business, the chairman announced the company would undertake further expansion of 5mt at Kalinganagar, taking the capacity to 13mt. TSL is in the process of commissioning the second blast furnace with 5mt capacity by September to take the present capacity to 8mt.

TSL will increase the capacity of subsidiary Neelachal Ispat Nigam to 5mt from 1mt as part of its plan to double its long products capacity in India to 40mt.

“Barring situations where commodity prices become very seriously impacted, I expect Tata Steel’s EBITDA and the operating cash flow to continue to grow year-on-year for a long period of time,” Chandra told shareholders.