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Tata Steel will announce the end of primary steelmaking in Wales on Friday as part of a wider restructuring of its UK operations that will lead to the loss of around 2,800 jobs in a huge blow to what was once one of the country’s biggest industries.
The Indian owners told union leaders on Thursday that it would push ahead with plans to close the two blast furnaces at its Port Talbot plant in Wales by the end of this year, leaving the UK as the only major economy without the ability to make steel from scratch.
The decision means Port Talbot, which has a workforce of 4,000 people, will bear the brunt of the redundancies. The job losses will be a big blow to the economy of south Wales with Tata the largest private employer in Port Talbot.
That move by Tata, reported by the Financial Times earlier this week, is part of a four-year transition to a greener form of steelmaking at its UK operations, which employ 8,000 people.
The company will invest £750mn to finance the restructuring backed by a £500mn grant from the British government. Tata intends to replace the blast furnaces for primary steelmaking at Port Talbot, which reduce iron ore to molten iron that is then turned into steel, with an electric arc furnace. This is a less labour-intensive method which makes steel from scrap steel.
Tata’s management rejected an alternative plan from the unions to keep one blast furnace open until 2032 in a bid to reduce the scale of the lay-offs, pointing out that the business is currently losing about £1mn a day. The alternative proposal would have cost an additional £650mn, according to sources familiar with the situation.
Tata accepted one proposal from the unions, which was to keep open the Port Talbot’s hot strip mill during a transition period, protecting about 200 jobs. The company plans to import semi-finished steel, or slab, for processing in the UK.
Company executives have sought to play down the impact on the workforce, pointing out that many of those facing redundancy are relatively close to retirement.
But union leaders have reacted angrily. Charlotte Brumpton-Childs, a national officer at the GMB union, said: “Large-scale job losses would be a crushing blow to Port Talbot and UK manufacturing in general. It doesn’t have to be this way — unions provided a realistic, costed alternative that would rule out all compulsory redundancies.”
Tata’s announcement will trigger a statutory 45-day consultation period over the redundancies.
The government pointed to the £500mn grant to help restructure Tata Steel’s operations, which it said would help protect thousands of jobs and ensure a “sustainable and competitive future” for the country’s steel industry.
“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 £80mn funding from UK government and £20mn from Tata Steel,” it said in a statement.
It added that the transition board would help support affected employees and the local economy and would be chaired by the Welsh secretary David Davies with ministerial representation from the Welsh government.
Stephen Kinnock, the Labour MP for Port Talbot, urged Tata Steel to “rethink” its approach.
The wider, India-based Tata Group is a big employer in the UK with about 60,000 employees in businesses ranging from Jaguar Land Rover to Tetley Tea.