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India’s Tata Steel has confirmed it will close the last two blast furnaces at the UK’s largest steelworks by the end of this year as part of a sweeping restructuring that will trigger the loss of up to 2,800 jobs at the site in Wales.
The decision signals the looming end of traditional steelmaking in Britain, an industry in which the country once led the world, and drew fierce criticism from unions and opposition party politicians.
It is a devastating blow to the 4,000-strong workforce at Tata’s main site at Port Talbot in south Wales, which is expected to bear the brunt of the job losses. Tata employs about 8,000 people across the UK.
Under the plans, the company will invest £750mn towards the restructuring and building of a less carbon-intensive, electric arc furnace on the same site, backed by a £500mn government grant.
Tata’s decision follows a similar move by British Steel, which last year said it would close its two remaining blast furnaces and build two electric arc furnaces. It said they could be operational by late 2025.
The closures are the latest chapter in decades of decline for Britain’s steel industry and will leave the UK as the only major economy without the ability to make primary steel from iron ore and coal.
Tata will cut roughly 2,500 jobs over the next 18 months mainly through the closure of the blast furnaces and coke ovens. A further 300 staff could be axed over the next three years. The company’s UK operations have been losing about £1.5mn a day.
T V Narendran, Tata Steel’s chief executive, told the Financial Times the status quo was “not sustainable”.
“The reality is that despite the sacrifices . . . by employees, the company . . . it is a global, tough industry,” he said.
Tata’s proposals will be put to worker consultation but were condemned by unions, which had put forward an alternative plan to keep open one blast furnace until 2032.
The plan would have cost more than £650mn, according to people close to the unions.
Roy Rickhuss, general secretary of the Community steel union, urged the company to reconsider, describing the decision as “unacceptable” and “devastating for Port Talbot and the wider steel industry”.
Meanwhile, Stephen Kinnock, Labour MP for Aberavon, urged Tata to “pull back from the brink” and reconsider its “utterly devastating” decision.
“Do we really want to be a country, given the dangerous and turbulent world in which we live, that isn’t able to produce its own steel?” he said.
Port Talbot is Britain’s biggest single emitter of carbon dioxide. The UK needs the steel industry to decarbonise if the country is to meet its pledge to reach net zero by 2050. Electric arc furnaces, which melt down scrap steel, are less carbon intensive but also much less labour intensive.
Tata said it expected the electric arc furnace to be operational by 2027. In the near-term, the company plans to import semi-finished steel from its bases in the Netherlands and India.
Tata’s Narendran did not rule out the option of building a “direct reduced iron” plant at Port Talbot in addition to the electric arc furnace.
A DRI plant uses natural gas, and potentially once available green hydrogen made from renewable electricity, instead of coking coal to reduce the iron ore. Tata is considering this option for its site in the Netherlands.
To go down that route, however, would require further investments, as well as gas “available in plenty and at a reasonable price”, he said.
Steel production in the UK has fallen from 24mn tonnes in 1971 to about 6mn tonnes today. The sector employs just under 40,000, according to trade body UK Steel. The industry makes up just 0.1 per cent of Britain’s total economic output but provides highly skilled manufacturing jobs.
Jonathan Reynolds, shadow business secretary, said ministers had never offered a “serious plan” for the steel industry in the long term.
They had “pushed a plan that uses millions of taxpayers’ money only to make thousands of people redundant and leaves us unable to produce primary steel in the UK”, he said.
The UK government said it was “determined to secure a sustainable and competitive future for the UK steel sector”, adding it had committed £500mn towards helping transform the Port Talbot site and protect jobs.
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