Tata Steel UK to shut blast furnaces, rejects unions' proposal

The proposal to maintain one blast furnace through the transition would have incurred at least £1.6 billion of additional costs, posed operational and safety risk, and put the business's future continuity in jeopardy, Tata Steel said in a press statement late on Thursday.

The proposal to maintain one blast furnace through the transition would have incurred at least £1.6 billion of additional costs, posed operational and safety risk, and put the business's future continuity in jeopardy, Tata Steel said in a press statement late on Thursday.

The company was engaged in formal and informal national level discussions with the trade unions for around seven months.

Also read: Tata Steel CEO TV Narendran says UK job cuts 'least bad option,' will continue talks with unions

Discussions will continue with the trade unions over the next two weeks on a potential Memorandum of Understanding on the future ambitions of the business and the impact of the restructuring on employees, the company further added.

"Having looked carefully at all the options over the past seven months in consultation with union representatives, we have decided to proceed with our proposed restructuring and transition," Tata Steel managing director TV Narendran said.

"This is the most viable proposal, in contrast to the unions' unaffordable plan which has high inherent operational and safety risk. Our proposal secures a long-term future for the business and preserves the majority of jobs in the UK. We will continue to work with the trade unions over the following 2 weeks to agree a memorandum of understanding on the future of the UK business and the impact on our people. Tata Steel is committed to creating a low-CO2 steel business at the heart of a green industrial ecosystem in Wales and the wider UK to safeguard steel supplies and create economic opportunities for generations to come," he said.

Also read: Tata Steel to cut 2,800 UK jobs, shut down 2 blast furnaces at Port Talbot

The £1.25 billion restructuring plan will see Tata Steel close its two blast furnaces by June and September this year and replace them with an electric arc furnace. While the new process causes less pollution, it also requires fewer people to run.

Tata Steel said the new plan will preserve around 5,000 jobs in the UK that would have been lost had the plant been shut. The restructuring also secures future supplies to customers, the company said.

The UK government has promised £500 million in grants to help Tata Steel make the transition. This came after the company said that it may be forced to stop steel making in the UK as its assets reach the end of their operational life and new investments were financially unviable.

"Tata Steel has offered its most generous severance terms ever to impacted employees, under a financial support plan, alongside wide-ranging retraining and community support schemes," the press statement read. A Voluntary Redundancy Aspiration process will be launched across Tata Steel UK from 15 May, it added.

Also read: Tata Steel proposes additional support package of 130 million pounds for Port Talbot workers in UK

Tata Steel plans to place equipment orders for the electric arc furnace by September and begin preparatory work at the site by December this year. Construction on the project is planned to begin by August 2025.

Tata Steel's heavy assets at Port Talbot, such as blast furnaces and coke ovens, are close to the end of their operational life. With emission regulations becoming stricter in the country, the company wants to replace these assets with an electric arc furnace that will rely on locally sourced steel scrap and produces lower emissions. UK aims to achieve net zero on carbon emissions by 2050.

Tata Steel's UK operations have also been loss making due to inherent cost inefficiencies in the UK, further promoting the need for the restructuring.

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Published: 25 Apr 2024, 11:12 PM IST