Tata Steel to close Port Talbot blast furnaces in UK, loss of 3,000 jobs expected: Reports

18 Jan 2024

Mint

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Tata Steel to close Port Talbot blast furnaces in UK loss of 3000 jobs
expected Reports

The company plans to shift to an electric-arc furnace-only site in a bid to reduce its carbon emissions and achieve net-zero targets.

Tata Steel is reportedly shutting down its Port Talbot blast furnaces in the UK after rejecting a trade union plan formulated to keep its blast furnaces running. The move is expected to cost around 3,000 jobs in the UK.

The decision was made as per the company's plans to shift to an electric-arc furnace-only site in a bid to reduce its carbon emissions and achieve net-zero targets.

The move came after a meeting between Tata executives and the community, GMB, and Unite unions at a London hotel, reported BBC. Tata Steel is expected to make an official announcement of its plans on Friday, January 19. The Indian steel maker will focus on its shift to electric arc furnaces to produce steel from recycled scrap, a process which guarantees to be a greener and cost-efficient way of producing steel.

The proposal made by the trade unions appeared to be the only way to ensure a frictionless transition to electric arc, which could save around 200 jobs for a shorter duration, reported The Guardian.

The unions proposed the idea of keeping the blast furnaces operational during the transition, at least till 2032. However, Tata Steel rejected the proposal finding it to be unaffordable given Port Talbot’s losses, according to The Guardian report. After Port Talbot, the UK's only operational blast furnace at Scunthorpe is also likely to meet the same fate.

Tata Steel reported a ₹6,511 crore loss in Q2 FY 24 due to Port Talbot

Tata Steel's UK business continued to be a major loss maker for the company over the past few quarters. The Indian steel maker witnessed a whopping loss of ₹6,511 crore in the July-September quarter of FY23-24 due to a ₹6,358 crore impairment charge related to a decarbonisation project at its Port Talbot plant in the UK.

“We have assessed the potential impact of the (Electric Arc Induction) EAF-based decarbonization project and restructuring in the UK," the company said in an exchange filing. The company had included a ₹2,746 crore impairment charge in its consolidated statements for the decarbonisation project and a ₹3,612 crore charge for restructuring and other provisions.

In September last year, the company also received the UK government's commitment of £500 million to help the firm overhaul the country’s biggest steelworks and keep it running. The payment will financially support Tata Steel in switching to a cleaner and more cost-effective steel production by transitioning its Port Talbot plant in South Wales.

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