Tata Steel has laid out a detailed plan to close the primary steel-making facilities in the UK, axing 2,800 jobs as it prepares to transition to a more financially and environmentally sustainable future, hoping to reverse more than a decade of losses.
The company disclosed that it has funnelled in £6.8 billion since 2007 to keep the loss-making British business operational.
In contrast, it had acquired Corus Group Plc, later renamed Tata Steel Europe, for £6.2 billion, having two primary steel operations spread over the UK and the Netherlands.
The restructuring exercise is part of a transition plan outlined in September 2023, when the Tatas secured a £500 million grant from the UK government to build a scrap-based electric arc furnace with a 3 million tonne capacity and close down coal-based blast furnace (BF).
Additionally, the Tatas will invest another £750 million to build the new steel mill by 2027, marking the biggest investment in the UK steel industry in a decade.
The Tata group has been in consultation since September with the UK multi-trade union representative body (UK Steel Committee) and its advisers.
In the process, the company considered their proposal for maintaining a single BF but concluded that continued BF production is not feasible or affordable at Port Talbot, Wales. However, it agreed to their suggestion to continue with the hot strip mill.
The Tatas will now start a statutory formal consultation with the workers on the proposed restructuring plan and support arrangements for the affected employees.
It has proposed to offer more than £130 million in support packages for affected employees, including redundancy terms, and community programmes. Tata Steel employs 8,000 heads in the UK.
T. V. Narendran, managing director & CEO of Tata Steel Group, recognised the future course as ‘‘difficult’’ but stressed that it is the ‘‘right one’’.
“Having invested almost £5 billion in the UK business since 2007, we must transform at pace to build a sustainable business in the UK for the long-term. Our ambitious plan includes the largest capital expenditure in UK steel production in more than a decade, guaranteeing long-term, high-quality steel production in the UK and transforming the Port Talbot facility into one of Europe’s premier centres for green steelmaking,” Narendran.
The company said it has invested £4.7 billion in its UK business since 2007. This includes improvements to the UK steelmaking operations and processing sites, as well as covering financial losses and pension restructuring costs.
In addition to this, Tata Steel has provided additional capital support to service Tata Steel UK’s share of debt. In addition to that, Tata Steel has invested a total of £6.8 billion in Tata Steel UK.
The announcement, however, did not go down well with the unions who threatened industrial action.
“We will now consult our members on the next steps and all options to protect jobs are on the table, including industrial action,” Union Community said in a statement.
They urged the Tata group and the UK government to reconsider their positions to safeguard the future of British steelmaking, and head off a ‘‘major industrial dispute’’.
