Tata’s Port Talbot steel BFs to shut down regardless of UK election result, company says

Tata’s sprawling Welsh steelworks is caught in a stark political division between the incumbent Conservative Party and the opposition Labour Party, with the latter widely seen to be likely to win the UK general election scheduled for July 4, and thus put an end to 14 years of Conservative administrations.

The Conservatives have agreed a support package of £500 million ($636 million) intended to help Tata transition from its current blast furnace (BF) based steelmaking model to a scrap-heavy electric-arc furnace (EAF) facility by 2027.

As part of these plans, Tata Steel intends to decommission both of its BFs by the end of September this year, and to import steel slab for re-rolling until EAFs can be brought into operation later this decade.

The Labour Party, meanwhile, has distanced itself from these plans amid concerns about the number of job losses expected to result from the BF stoppages.

Labour Party leader Keir Starmer said earlier this month that he would “fight for every single job and fight for the future of steel in Wales.” Labour’s position is supported by steelworkers’ trade unions, including its plans to create a £3 billion investment steel fund to preserve steelmaking in the UK.

The issue has come to the fore in the UK press in the past few days, with an increasingly hostile tone adopted by trade union Unite toward Tata Steel UK’s management, and a visit from Labour’s shadow secretary of state for business and trade, Jonathan Reynolds, to the Port Talbot works.

BF shutdown to proceed

Tata UK “confirms that it will continue with the announced closure of the heavy end assets and the restructuring program at Port Talbot in the coming months,” it said on Tuesday. This would be irrespective of the result of the general election.

Port Talbot’s heavy end assets “are nearing their end of life, are operationally unstable, and are resulting in unsustainable financial losses,” Tata said.

It added that the coke ovens had already been closed, in March 2024, because operations had become “unfeasible and unsafe.”

“Therefore, the company is compelled to continue with its plans to decommission Blast Furnace No5 at the end of June, followed by decommissioning of Blast Furnace No4 by the end of September,” the firm said. Downstream assets would continue to operate by using imported semi-finished steel until the new EAFs begin to operate.

At the same time, Tata said that it was “concerned” about UK media reports on Monday. It believed that the political uncertainty and differences between the two political parties, concerning the timing and form of the £500 million grant, “will place the EAF project and the long-term future of steelmaking at Port Talbot at significant risk.”

“We urge and request the current and the incoming governments, post-election, to adhere to and safeguard the agreed terms of the £500 million package of support for the electric-arc furnace project announced in September 2023,” the company said.

Tata also noted that the grant funding was not linked to the continuing financial losses and the instability of the existing heavy plate assets, stressing that their closure was already “under way and immutable.”

According to Fastmarkets’ information, the two BFs at Port Talbot have combined capacity for 5 million tonnes per year of hot metal. The site at Port Talbot produces hot-rolled and cold-rolled coil, as well as tubes.

Tata Steel UK planned to replace the BF capacities with EAFs. But the combined capacity of the new EAFs would only be around 3 million tpy of crude steel.

Scrap processors in the UK have already been contacted by Tata Steel with the purpose of preparing them to produce higher-grade, lower-residual scrap for the future Tata EAF, a major scrap seller source told Fastmarkets last week.

The scrap required for the unit must be of high grade because the EAF will produce flat steels for consumption in the automotive sector, which has much stricter impurity requirements than the commodity grades of rebar typically made in European EAF-based operations.

Similar moves have been seen in Germany, where scrap processor TSR produces the high-grade TSR40 scrap grade designed for use by flat steelmakers to produce automotive-grade steel coil.

Threat of industrial action looms large

Despite Tata Steel’s firm resistance to any suggested changes to its plans, the Unite trade union was likely to put the steelmaker’s resolve to the test, and could launch strike action.

Unite last week confirmed its intention to start industrial action on June 18. According to the union, around 1,500 Tata steelworkers at Port Talbot and Newport Llanwern will take part in the protest against Tata’s plans to close its BFs and to eliminate 2,800 jobs.

Unite members were expected to begin a “work to rule” action on June 18, which would mean that no additional shifts or overtime would be worked.

The planned action would severely disrupt and delay Tata’s operations and its order book, according to Unite. But Tata contested this, with a spokesperson saying that output at the steelworks would not be affected, and that two other major British trade unions, Community and GMB, would not be participating in the action.

Nevertheless, both Community and Unite said that Tata Steel UK should halt its plans to close its BFs until after the election in July.

“[Jonathan] Reynolds is absolutely right to call on Tata not to take irreversible decisions before an election,” Roy Rickhuss, general secretary of trade union Community, said on Monday, “and to engage with Labour and the [trade] unions to consider alternatives to protect jobs.”

Julia Bolotova in Brussels contributed to this report.

Discover how our suite of green steel prices can support your ‘green’ investment decisions while bringing transparency to the industry. Talk to our experts today.