The owner of the Port Talbot steelworks is preparing to mount a defence of its decision to cut thousands of jobs at the south Wales plant, and float the possibility of creating more UK jobs in future, during testimony to MPs this week.
The Indian conglomerate Tata confirmed this month that it planned to close two blast furnaces at Port Talbot – shedding up to 2,800 jobs, with a further 300 potential redundancies at another site, in Llanwern.
The company and the government have faced criticism from MPs and unions, who argued that jobs could have been saved with greater investment and state support.
Tata Steel’s global chief executive, TV Narendran, and its UK chief executive, Rajesh Nair, will appear before MPs on the Welsh affairs committee on Tuesday as the impact of the company’s decision on the local community, Wale’s economy and the future of the UK steel sector is examined.
Tata’s decision to close the blast furnaces – along with a parallel decision by Chinese-owned British Steel in Scunthorpe – has caused consternation among MPs because it would leave the UK unable to make primary steel directly from iron ore.
In a document sent this weekend to employees and the government, and seen by the Guardian, Tata Steel attempted to “factcheck” claims made in coverage of its decision, which it said had presented a “misleading picture”.
Tata is expected to argue that it is open to investment in a new plant to make direct reduced iron (DRI), a technology that can produce iron using methane or hydrogen that would then go into the new electric arc furnaces.
The big advantage of the DRI process is that it is possible to produce steel with zero carbon emissions, meaning it is likely to play a key role in decarbonisation. It would also replace about 200 of the jobs under threat at Port Talbot, Tata said – although that would still leave thousands out of work.
The document said: “Tata Steel has also made clear that, with the right investment and policy environment, it is open to further investment, such as in a direct reduced iron (DRI) plant. We would look at the case for a potential DRI plant in the UK if the business conditions are right and, if in future, the government supported further investment.”
The document also directly addresses the prospect of a Labour government, adding that the company “is open to further investment in the future” but that it wants to turn the Port Talbot plant to profit first. Labour has said it will invest £3bn in the steel industry, and it is seriously considering backing hydrogen steelmaking as an option.
However, some politicians, including local MPs, may look sceptically at any suggestion that Tata should be given hundreds of millions of pounds more in subsidies shortly after it has received about £1bn in pledged support. Half of that will support Port Talbot’s switch to electric arc furnaces – remaking new steel from the UK’s abundant scrap – while the rest will help Tata, which also owns Jaguar Land Rover, build a gigafactory to make batteries for electric cars.
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The company’s executives are to claim that Tata has been “an incredibly patient investor” in the UK steelworks since acquiring it in 2007, but that it has made no profit or dividends.
It is understood that the document contains the core arguments Narendran and Nair intend to make at the committee hearing. The committee will also hear evidence from Vaughan Gething, the minister for the economy for the Welsh government, as well as representatives of the Community, GMB and Unite unions.
Tata plans to import semi-finished steel slabs from sites in India and the Netherlands before the electric arc furnace is operational in 2027. The GMB is expected to argue that the steel imported while the EAF is being built is likely to have a high carbon content, even before the emissions generated in transit to the UK are taken into account.
The unions have previously criticised Tata for highlighting its emissions reduction efforts in the UK, while at the same time building a new, polluting blast furnace at Kalinganagar, in its home country of India.
