Updated April 25th, 2024 at 22:23 IST

Tata Steel UK says going ahead with plan of closing down old blast furnaces

The closure is part of GBP 1.25-billion investment to see transition to a state-of-the-art Electric Arc Furnace.

Reported by: Business Desk
Tata Steel Blast furnace closure | Image:Unsplash
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Transition to state-of-the-art furnace: Tata Steel UK on Thursday issued a confirmation on its decision to proceed with the closure of two old blast furnaces located at its Port Talbot steelworks in south Wales.
The companies decision comes in the wake of its GBP 1.25-billion investment to see a  transition to a state-of-the-art Electric Arc Furnace.

Seven months after first making the announcement,  the Mumbai-headquartered steel major said it had held several formal and informal discussions with the UK trade unions about the major transformation which preserves 5,000 jobs and secures future steel supplies. 

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The company also expected to create more indirect jobs in engineering and construction and reduce CO2 emissions by 5 million tonnes each year.

“Tata Steel’s decision to move to greener steelmaking in Port Talbot is one that has been made by the company alone. The UK government is acting to support steelmaking in Wales and to safeguard its future,” reads a statement from the UK government statement, which had pledged GBP 500 million in a deal with Tata Steel UK last year.

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As per the company, a joint Transition Board will help affected workers and stressed that without the deal with Tata all the jobs would have been lost at Port Talbot.

"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,” said Tata Steel’s CEO and Managing Director TV Narendran.

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“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,” he said.

As per the company, the unions’ proposal to maintain one blast furnace through the transition would have incurred at least GBP 1.6 billion of additional costs, including higher operating costs and higher capital expenditure, created significant operational and safety risk, and put the business’s future continuity in jeopardy.

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As a part of the consultation process, Tata Steel revealed it revised its original proposal, agreeing to continue to operate the Hot Strip Mill through the transition period. The company also reached alignment with the UK Steel Committee that production on the coke ovens and one blast furnace needed to cease by mid-2024.

"We have spent the last seven months openly and transparently sharing detailed business information, asset condition, maintenance plans and market forecasts with our trade union colleagues and advisers. While we have agreed to keep the Hot Strip Mill running through the transition, the unions’ plan presents significant financial, operational and safety challenges, and delays the transition to green steel by two years. We have concluded that it is not feasible to accept their plan, and it is not affordable,” said Tata Steel UK CEO Rajesh Nair.

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Published April 25th, 2024 at 22:23 IST