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Cost reduction is necessary in order to compete in Europe’s longstanding climate of low demand, the company said.
No exact timeline for the cutbacks has yet been made clear, but Tata Steel will now begin a 45-day consultation period with workers and workers’ representatives.
The change was needed to ensure the future of Tata Steel’s coil business in the UK, the company’s European ceo, Karl Koehler, said.
“Steel demand and prices are likely to be under pressure for some years,” Koehler said.
“Our business rates in the UK are much higher than in other EU countries, and our UK energy costs will remain uncompetitive until new mitigation measures come into effect,” he added.
In March, the UK government announced measures to reduce costs for energy-intensive industries such as steel.
The company denied that the job cuts will affect production, but declined to reveal details about the current utilisation rate at the 5 million-tpy Port Talbot plant.
“We produce in accordance with our customers’ demands, and that is not affected by today’s announcement,” a Tata Steel spokesman told Steel First on July 1.
Among its efforts to improve productivity, the company noted its £250 million ($426 million) investment in steelmaking technology.
This sum includes the complete rebuild of blast furnace No4 at Port Talbot at a cost of £200 million ($341 million). It was relit in the first quarter of 2013.
Last year, Tata Steel Europe’s overall production was 15.5 million tonnes of crude steel. With total capacity of 17.9 million tonnes, this means that capacity utilisation was 87%, according to the spokesman.
The company previously cut 580 jobs at the Port Talbot plant, in 2012.