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Tata Steel's Electric Arc Furnace Project in Limbo

  • Tata Steel is concerned that the UK General Election may jeopardize its £1.25bn investment plans at its Port Talbot site.
  • The company urges the current and incoming government to adhere to the agreed terms of the £500m support package for the Electric Arc Furnace project.
  • Tata Steel is moving to a greener form of production but faces operational challenges and financial losses with its current heavy end assets in Port Talbot.
London

Tata Steel bosses have raised concerns about the impact the UK’s General Election on July 4 could have on its £1.25bn plans at its Port Talbot site.

The company said it is “apprehensive” following media reports on Monday, June 10, regarding the closure of the heavy end assets and restructuring program, which was outlined earlier this year.

Yesterday, Labour reiterated calls for Tata Steel to wait for the party to come into government before shutting off blast furnaces which will cost thousands of jobs in south Wales.

Tata Steel is moving to a greener form of production, using an electric arc furnace – which needs fewer workers, leaving jobs at risk.

On a visit to Tata Steel in Port Talbot on Monday, senior Labour figures called for the company to delay shutting off all the blast furnaces.

Instead, they urged the company to wait for a possible Labour government next month so fresh talks can take place, with hopes the firm adopts a union plan for one furnace to be left on while a transition to green steel production takes place.

The visit came as steelworkers said they would ban overtime as part of industrial action in protest at the job loses starting on June 18.

Tata Steel raises concerns at General Election’s impact

In a statement, Tata Steel said: “We are therefore apprehensive reading UK media reports suggesting that the £1.25bn investment, the largest in many decades in British steelmaking, may be put in peril due to policy differences expressed by the Conservative and Labour parties, during the ongoing election period.

“We urge and request the current and the incoming government post-elections, to adhere to and safeguard the agreed terms of the £500m package of support for the Electric Arc Furnace (EAF) project announced in September 2023.

“This project has been developed to ensure production of low-emission high-quality steel in Port Talbot, preserving primary steelmaking in Britain and creating the potential for a future green manufacturing cluster in South Wales.

“The current heavy end assets of Port Talbot are nearing their end of life, are operationally unstable and are resulting in unsustainable financial losses.

Tata

“The coke ovens, a critical facility for primary steelmaking, had to be closed in March 2024, as operations became infeasible and unsafe.

“Therefore, the company is compelled to continue with its plans to decommission Blast Furnace #5 at the end of June, followed by decommissioning of Blast Furnace #4 by the end of September.

“The downstream assets will continue to service customers by utilising imported semi-finished steel till the new EAF is built and commissioned.”

Tata Steel added that in April it completed an “exhaustive” seven-month process of consultations on all options with the unions.

The conclusion was the continuity of Blast Furnace #4 through the transition “is not technically, operationally or financially viable”, putting the EAF build at risk and delaying the transition by at least two years.

Tata Steel also said that to mitigate the impact of the announced restructuring, a “generous voluntary redundancy programme” has been developed and is being offered to the impacted employees.

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The proposed grant funding from the UK Government is ring fenced for building the new EAF, which is “critical to securing long-term supply of steel for Tata Steel’s UK downstream assets and protecting 5000 jobs in various Tata Steel UK sites, the company said.

It also said that it is not linked to the “ongoing financial losses and the instability of the existing heavy end assets, whose closure is now underway and immutable”.

Tata Steel added: “We are therefore concerned with the UK media reports since yesterday as further political uncertainty on the timing and form of the grant will place the EAF project and the long-term future of steelmaking at Port Talbot at significant risk.”

By CityAM

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