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Tata Steel has announced the closure of the Port Talbot steelworks, which will lead to around 2,800 job losses and marks the end of an era for a facility that has been operating for more than a century.
The Indian conglomerate said: “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%.”
It was reported that the firm was already considering making major cuts in November but pulled back on the announcement at the last minute. At the time, it entered into conversation with union representatives and framed the plans as part of its decarbonisation and cost-cutting push.
In a letter to the Prime Minister, Wales’ first minister Mark Drakeford said that the loss of virgin steel production at scale would “have a profound impact on the UK’s economy”.
“I would ask if you and I could have an urgent discussion regarding this strategic matter at your earliest convenience,” he added.
On a global basis, Tata Steel produced around 35 million tonnes of crude steel annually and employs around 77,000 employees across 26 countries.
In September, Tata Steel announced plans to invest in a £1.25bn state-of-the-art scrap-based electric arc furnace at Port Talbot, which the government would support with a £500m grant.
The BBC reported that Tata met this week with the GMB and Community unions, which urged the firm to keep one of the blast furnaces open for a transitional period while the new furnace was installed. But Tata rejected the proposals due to the high costs of keeping the loss-making factory open during the estimated four years it needs to transition over to the new technology.
Despite the UK’s long history of steelmaking, the domestic sector has struggled to remain competitive in recent years as countries like China flood the market with cheap steel, driving prices down.
Steel production’s energy-intensive nature leads to high electricity consumption, and these costs can represent up to 180% of steel producers’ gross value added in the UK.
In November, the government was urged to reduce industrial electricity prices for the steel sector or risk it becoming uncompetitive even with European manufacturers.
According to trade body UK Steel, domestic steelmakers pay nearly twice as much as those in Germany and France, partly due to higher grid connection costs.
