Tata Steel said the proposed investment is supported by the government, which has committed up to £500m to enable the transformation.
Today’s announcement (January 19, 2024) follows discussions with the UK Steel Committee – made up of the company and unions – in which it was agreed to continue operating the hot strip mill during the transition and beyond.
Another proposal sought to keep blast furnaces operating during the building of the electric arc furnace.
Tata Steel has rejected this proposal on the grounds of operating cost, adding that building an electric arc furnace in an already operating steel melt shop would be fraught with risk, significantly increasing costs, creating a sub-optimal plant layout, delay implementation of the plan and jeopardise the proposed business transformation programme.
Tata Steel now proposes to shut down its two blast furnaces, with the first blast furnace and coke ovens closing around mid-2024 and then progressively winding down the remaining heavy end assets during the second half of the calendar year.
In a statement, the company added that the proposal also includes a wider restructuring of other locations and functions across the company, including the intended closure of the Continuous Annealing Processing Line in March 2025.
It is estimated that 2,500 jobs could be lost in the next 18 months with a further 300 job losses in the next three years. Tata Steel said it is committed to ‘maximising voluntary redundancy before seeking any compulsory reductions’, adding that it will provide a package of support for skills training, community-support programmes and job-seeker initiatives.
T V Narendran, Tata Steel’s CEO and managing director, said: “The course we are putting forward is difficult, but we believe it is the right one. Having invested almost £5bn in the UK business since 2007, we must transform at pace to build a sustainable business in the UK for the long term. Our ambitious plan includes the largest capital expenditure in UK steel production in more than a decade, guaranteeing long-term, high-quality steel production in the UK and transforming the Port Talbot facility into one of Europe’s premier centres for green steelmaking.”
Commenting on today’s announcement, Jess Ralston, analyst at the Energy and Climate Intelligence Unit (ECIU) said: "These jobs did not have to be lost. A proper planned transition to the steel industry of the future, including hydrogen, could have kept these jobs in communities that need them. The rest of the world is growing their industry and keeping their jobs in steel. The UK industry will have to transition or face decline.
"We're currently falling behind Europe in the development of green steel manufacturing, as demand for the product is set to increase. There are around 40 green steel plants in Europe, which are moving away from older coal plants but keeping jobs in steel. Does the UK have a long-term, strategic plan for industry?"