Tata Steel said on Friday it planned to close blast furnaces at Britain’s largest steel mill in Port Talbot, Wales, and replace them with electric furnaces – a move that would cut carbon emissions but eliminate 2,800 jobs. Can.
The company, which is part of the India-based Tata Group, says the steel mill, much of which dates back to the 1950s, has often lost money.
“The course we are pursuing is difficult, but we believe it is the right one,” company Chief Executive TV Narendran said in a statement. “We need to change fast to build a sustainable business in the UK for the long term.” He said Tata has invested about 5 billion pounds (about $6 billion) in the British business since it bought the mill in 2007.
Last year, the British government offered £500 million to support Tata’s plan, which is estimated to be worth up to £1.25 billion.
Although the announcement was not a surprise, unions representing workers at the plant said they were angry that their proposals to save jobs had been rejected. The plant employs about 4,000 people, and it was unclear how many jobs would be cut in Port Talbot; Tata employs around 8,000 people in the UK.
The two unions, Community and GMB, said in a statement, “It is outrageous that Tata Steel and the UK Government are intent on pursuing the cheapest plan rather than the best plan for our industry, our steelworkers and our country.”
Tata wants to replace much of the current operation, which uses coal to extract iron from ore, with an electric furnace that makes steel by melting scrap metal in a spark flame. Electric steel making, which is more common in the United States than in Europe, employs fewer workers.
The government says the change will ensure steel manufacturing can continue at the site and cut the UK’s overall greenhouse gas emissions by 1.5 per cent.
Unions expressed skepticism that an electric furnace would be able to produce metal of sufficient quality for some demanding applications, including automobile body panels and food and beverage cans.
But what is mainly at issue is the timing of the move. In November, the unions, with the help of Syndex, a consulting firm, presented a counter-proposal to Tata that included keeping one of the two blast furnaces open until 2032. He also proposed that Tata build a smaller electric furnace than the plan as well as a device called a direct reduction plant, which produced pig iron through a cleaner process than a blast furnace. That iron could be used to make high quality metal.
Unions said the plan could have avoided mandatory layoffs.
However, Tata has decided to move forward more quickly, disappointing the employees.
The company said it would shut down one blast furnace in the middle of this year and the rest of the plant by the end of the year. Tata also said it would launch a “comprehensive restructuring of other locations”.
Tata said it would supply its British network with semi-finished steel from plants in India and the Netherlands until the new furnace is built.
“We all understand we have to get to green industry, but it can’t be done in a few months,” said Barry Evans, a steelworks employee and community union official. “It’s just off the edge of a cliff.”