Ful story: Port Talbot steelworks: blast furnaces to close, costing up to 2,800 jobs
Rob Davies
The owner of Port Talbot steelworks has confirmed that the plant’s two blast furnaces will shut down, in what unions have described as an “absolute disgrace” that will cost up to 2,800 jobs directly and many more in the south Wales community, my colleague Rob Davies writes.
Port Talbot’s parent company, the Indian-owned Tata Steel, said it was not “feasible or affordable” to adopt trade union proposals to continue production at the loss-making plant during a transition to greener, cheaper steelmaking operations.
On Friday, after trading on the stock exchange ended in Mumbai, Tata officially confirmed its plans, which will result in most of the plant’s 4,000 workers losing their jobs.
About 200 positions will be saved by maintaining operations at the site’s hot strip mill, which rolls steel slab.
The cuts comes despite the government providing £500m of financial backing for Tata’s £1.25bn four-year plan to build electric arc furnaces, which make steel from scrap metal rather than virgin steel made from scratch.
Key events
Tata Steel’s announcement is a “social and economic body-blow”, says Vaughan Gething, the Welsh government’s Minister for Economy
Gething explains:
In choosing not to pursue a modern industrial strategy with steel at its core, the UK Government has damaged our ability to create the long term, reliable growth that would turn net zero measures into more sustainable, green jobs in Wales.
We have repeatedly urged the UK Government to act at scale with the investment needed to support the move to greener methods of steel production and for the Company to lead on a fair and just transition for its workers and those UK companies within its extensive supply chain.
Today’s announcement presents a social and economic body-blow with profound and far-reaching implications for Wales. It is our firm view that the Prime Minister and his cabinet do have levers at their disposal that could prevent the worst case scenario and the scale of economic loss we now face. UK Ministers must now work rapidly in the coming hours and days to convene talks that explore all avenues to bring about a longer, fairer transition that supports a larger, more secure steel industry.
Gething adds that he has raised concerns with the Secretary of State for Business and Trade, Kemi Badenoch MP and Minister of State, Nusrat Ghani MP, adding:
It is a matter of deep regret that the UK Government – and in particular the Department for Business and Trade – has to date demonstrated no recognition of the strategic importance of the sector. Unlike previous Business Secretaries, the current UK Secretary of State for Business and Trade has refused to meet with Welsh Ministers at a time of unrivalled uncertainty and risk for the sector.
Wales Online report that Wales’ First Minister, Mark Drakeford, was turned down by the prime minister when he requested “urgent discussions” on the job losses announced at Tata’s Port Talbot plant.
Drakeford wrote to Rishi Sunak in the wake of a meeting between unions and steel bosses on Thursday, they say.
Today, Drakeford says his administration will keep working to protect the future of Welsh steel production, and support all those affected by today’s announcement from Tata Steel.
This news will be devastating for steel workers and communities in Wales.
We will carry on working to protect the future of Welsh steel production and we will do all we can to support all those affected by today’s announcement.https://t.co/VFx41yMHpW
— Mark Drakeford (@PrifWeinidog) January 19, 2024
Accounting professor Prem Sikka says the answer is to nationalise the UK’s steel assets, rather than handing large subsidies to private companies:
Tata Steel confirms 2,800 job losses at Port Talbot site, despite £500m subsidy.
Govt hands billions in subsidies to companies; doesn’t own shares or have board representation to direct anything.
Money vanishes when companies go.
Nationalise steel.https://t.co/8RwJovrjxJ
— Prem Sikka (@premnsikka) January 19, 2024
Ful story: Port Talbot steelworks: blast furnaces to close, costing up to 2,800 jobs
Rob Davies
The owner of Port Talbot steelworks has confirmed that the plant’s two blast furnaces will shut down, in what unions have described as an “absolute disgrace” that will cost up to 2,800 jobs directly and many more in the south Wales community, my colleague Rob Davies writes.
Port Talbot’s parent company, the Indian-owned Tata Steel, said it was not “feasible or affordable” to adopt trade union proposals to continue production at the loss-making plant during a transition to greener, cheaper steelmaking operations.
On Friday, after trading on the stock exchange ended in Mumbai, Tata officially confirmed its plans, which will result in most of the plant’s 4,000 workers losing their jobs.
About 200 positions will be saved by maintaining operations at the site’s hot strip mill, which rolls steel slab.
The cuts comes despite the government providing £500m of financial backing for Tata’s £1.25bn four-year plan to build electric arc furnaces, which make steel from scrap metal rather than virgin steel made from scratch.
Wales Green Party leader Anthony Slaughter has said it is “unacceptable” that the government are allowing Tata to cut so many jobs in Port Talbot, by not following the alternatives proposed by the GMB and Community unions.
Slaughter says:
“This is devastating news for the local community and beyond. Wales knows only too well what happens when communities are abandoned by government and industries. We saw it with the coal industry and now it is happening again with the steel industry.
“Decarbonisation of industry is vital, but communities and people’s jobs must be protected. That means putting unions and workers at the heart of a just transition.
“The government has provided Tata with £500 million toward the cost of future steel production. It has a responsibility to ensure that money is used to protect Port Talbot and the wider Wales economy.
“Instead, it is allowing the company to ignore viable alternatives to these job losses put forward by the unions. That is unacceptable and must be resisted.”
GMB & Community: extremely disappointing that plan to save jobs was rejected
The GMB and Community unions say it is “extremely disappointing” that Tata rejected its proposal to keep blast furnaces running, saving 2,300 jobs.
That proposal involved keeping Port Talbot’s Blast Furnace Number 4 running until 2032, and building one smaller Electric Arc Furnace (EAF), and later probably a second EAF, rather than a single larger EAF (as Tata plans to do).
In a joint statement, the unions say:
In one area the company did accept the Multi-Union recommendation, which is to keep the Hot Strip Mill open to roll slab over a transition period, supporting hundreds of jobs there, but Tata have rejected our broader proposals to safeguard production capacity and protect jobs.
Instead, more than 3,000 jobs and the future of British steelmaking is at stake, they add, urging the government to take action.
They say:
It is an absolute disgrace that Tata Steel, and the UK Government, appear intent on pursuing the cheapest instead of the best plan for our industry, our steelworkers and our country. It’s unbelievable any Government would give a company £500m to throw 3,000 workers on the scrapheap, and our Government must reevaluate its miserly offer to support investment at Tata Steel.
The German, French and Spanish Governments are all committing billions to secure the future of their strategically important steel industries, and our Government must show similar ambition. It is encouraging that the Labour Party have reaffirmed their commitment to the £3bn Green Steel Fund, and using it to supporting a just transition at Tata Steel UK. Tata must think again, and work with the UK Government and Labour to unlock the investment our industry needs and deserves.
Following Tata’s announcement, a UK government spokesperson has said there is help available for those losing their jobs in Port Talbot:
“We are determined to secure a sustainable and competitive future for the UK steel sector, which is why we have committed £500 million of UK Government support that will transform the site and protect thousands of jobs – both in Port Talbot and throughout the supply chain.
“Engagement with trade unions is rightly a company-led process.
“There is a broad range of support for staff affected, including a dedicated Transition Board backed by £80 million funding from UK Government and £20 million from Tata Steel.
“Chaired by the Welsh Secretary with ministerial representation from the Welsh Government, the Board will support both affected employees and the local economy.”
Unite: This is industrial vandalism on a grand scale
The Unite union has pledged to use “everything in its armoury” to defend UK steel workers and the steel industry.
Unite general secretary Sharon Graham condemned Tata’s plan as “industrial vandalism on a grand scale.”
“Unite is ready to use everything in its armoury to defend steel workers and our steel industry. We have detailed research demonstrating how and why Tata should be expanding UK steel production in line with growing demand, not slashing its workforce.
We have secured funding from a future Labour government that could do this. Tata’s plan to close the blast furnaces is simply industrial vandalism on a grand scale.”
Graham adds that the UK government needs to defend workers and communities, as well as Britain’s industrial base and our national security, adding:
Instead, they are giving Tata hundreds of millions of pounds to fund their plan to cut jobs, cut capacity and give more business to their plants in other countries, like India and the Netherlands. How is that acceptable?”
Tata Steel says that it considered independent studies into whether it could keep the blast furnaces running while it built the new electric arc furnace – as UK unions had proposed.
But, it claims, such a plan was not “not feasible”, as it would be too expensive, and not possible due to the “deteriorating” performance of some Port Talbot assets.
Tata Steel says:
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The projected operating costs of such a configuration are financially unaffordable
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Building the Electric Arc Furnace in an already operating steel melt shop would be fraught with risk, significantly increasing costs, creating a sub-optimal plant layout, delaying implementation of the plan and jeopardising the proposed business transformation programme
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The near end-of-life condition and deteriorating operating performance of several heavy end assets in Port Talbot
Another blow: Tata Steel expects that a further 300 roles could be impacted in three years, taking the total at risk to over 3,000.
This culd include “the potential consolidation and rationalisation of cold rolling assets in Llanwern” once the required investments are completed at Port Talbot, Tata says.
Port Talbot decision: The Key Points
Here are the key points from Tata Steel’s devastating announcement that nearly 3,000 jobs are at risk through the closure of its Port Talbot blast furnaces:
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The plans follow detailed discussions with the UK multi-trade union representative body (UK Steel Committee) and its advisors, in which Tata Steel carefully considered their endorsed proposal for maintaining a single blast furnace
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Having considered that proposal, Tata Steel has agreed to adopt elements of it, but considers that continued blast furnace production is not feasible or affordable
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Tata Steel will now commence statutory consultation on the proposed restructuring plan and support arrangements for affected employees
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Up to 2,800 employees are expected to be potentially affected, out of which around 2,500 roles would be impacted in the next 18 months
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The company will endeavour to maximise voluntary redundancies and proposes to commit in excess of £130 million to a comprehensive support package for affected employees, including redundancy terms, community programmes, skills training and job-seeking initiatives
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This is in addition to the £100 million funding for the Transition Board set up with UK and Welsh governments to support affected employees, contractors and communities
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Port Talbot’s two high-emission blast furnaces and coke ovens would close in a phased manner with the first blast furnace closing around mid-2024 and the remaining heavy end assets would wind down during the second half of 2024. The proposal also includes a wider restructuring of other locations and functions across the company, including the intended closure of the Continuous Annealing Processing Line (CAPL) in March 2025
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In discussion with the UK Steel Committee, Tata Steel has agreed that it would continue to operate the hot strip mill through the proposed transition period and in future. In addition, the downstream and steel processing centres would continue to serve customers by utilising imported semi-finished steel from Tata Steel plants in the Netherlands and India as well as other select strategic suppliers
In a statement, Tata says:
“Tata Steel today announced it will commence statutory consultation as part of its plan to transform and restructure its UK business.
“This plan is intended to reverse more than a decade of losses and transition from the legacy blast furnaces to a more sustainable, green steel business.
“The transformation would secure most of Tata Steel UK’s existing product capability and maintain the country’s self-sufficiency in steelmaking, while also reducing Tata Steel UK’s CO2 emissions by five million tonnes per year and overall UK country emissions by about 1.5%.”
Tata Steel to cut up to 2,800 UK jobs in blast furnace closures
Newsflash: Tata Steel has announced that, as feared, it plans to close its two blast furnaces in at Port Talbot by the end of this year.
Under Tata Steel’s proposed restructuring programme, Port Talbot’s two high-emission blast furnaces and supporting facilities would be closed in a phased manner.
The first blast furnace and coke ovens closing around mid-2024 and then progressively winding down the remaining heavy end assets during the second half of the calendar year.
It would then build a new Electric Arc Furnace by 2027.
The move means that up to 2,800 workers potentially losing their jobs at its steelworks plant in Wales, with around 2,500 roles impacted in the next 18 months.
As flagged earlier, Stephen Kinnock, Labour MP for Aberavon, home of the Port Talbot steelworks, has said this would be an “utterly devastating” decision.
