Tata Steel to Strengthen UK Business: Negotiations Finalised with UK Steel Committee

On April 25, 2024, the global steel producer Tata Steel Limited announced in an exchange filing that it will invest £1.25 billion in the UK Steel Industry. This announcement follows the company’s proposal to restructure the UK business and 7 months of formal and informal discussions with the UK Steel Committee (the multi-union forum) and its advisers.

Under the investment programme, Tata Steel Limited will develop a state-of-the-art Electric Arc Furnace in Port Talbot and commence the closure of the existing heavy-end assets in the following months. The company further added that this largest investment in the UK steel industry for decades safeguards steel sovereignty in Britain, preserves 5,000 jobs, and secures future supplies to customers.

Tata Steel modified its first proposal during the consultation process and committed to keeping the Hot Strip Mill running during the transition. Additionally, the company and the UK Steel Committee agreed that one blast furnace and one set of coke ovens were required for output to end by the middle of 2024

The company thoroughly examined an alternate multi-union proposal that included keeping Blast Furnace No. 4 operational during the switch to an electric arc furnace. Following a comprehensive analysis, the unions’ counsel and Tata Steel came to the same conclusion: this plan would result in significant additional expenses, including greater capital expenditures and operating costs, totalling at least £1.6 billion.

Furthermore, as the business informed the UK Steel Committee representatives who were on site, constructing a new electric arc furnace while keeping the current steel melting shop open is a difficult and high-risk undertaking that will cause a two-year delay in the transition.

As a result, the company will move forward with its plan, which calls for the closure of Port Talbot’s two blast furnaces, Nos. 5 and 4, by the end of June and, at the latest, the end of September, respectively. Once Blast Furnace No. 4 closes, the remaining heavy-end assets will be phased out, and the Continuous Annealing Processing Line will shut down in March 2025.

“Having looked carefully at all the options over the past seven months in consultation with union representatives, we have decided to proceed with our proposed restructuring and transition. This is the most viable proposal, in contrast to the unions’ unaffordable plan, which has high inherent operational and safety risks. Our proposal secures a long-term future for the business and preserves the majority of jobs in the UK,” said Mr T V Narendran, CEO and Managing Director of Tata Steel

He further added “We will continue to work with the trade unions over the following 2 weeks to agree a memorandum of understanding on the future of the UK business and the impact on our people. Tata Steel is committed to creating a low-CO2 steel business at the heart of a green industrial ecosystem in Wales and the wider UK to safeguard steel supplies and create economic opportunities for generations to come.”

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