Tata Steel UK to proceed with Port Talbot shutdown, move toward electric arc furnace production

Tata Steel UK told trade unions April 25 that it will go ahead with its plan to shut Port Talbot blast furnaces in Wales and switch to electric arc furnace production amid its GBP1.25 billion transformation to low carbon production.

After seven months of formal and informal national-level discussions with the UK trade unions, Tata said it would shut its Port Talbot blast furnaces No. 5 and No. 4, respectively, by the end of June and by the end of September. After the closure of Blast Furnace No. 4, “the remaining heavy end assets will wind down, and the Continuous Annealing Processing Line will close in March 2025,” the company said.

Tata Steel carefully considered an alternative multi-union plan, according to a press note, which involved continuity of blast furnace No. 4 through the EAF transition, as requested by the union, but the company and the unions’ adviser reached the conclusion that this plan would involve significant additional costs of at least GBP1.6 billion, including higher operating costs and higher capital expenditure.

UK union Unite said Tata’s confirmation that it was ending national union consultations and that it will begin enacting its plans will be answered with industrial action.

The union has described Tata’s claim that alternative options for Port Talbot are not feasible as a “sham.”

During the consultation process, Tata Steel revised its original proposal, agreeing to keep operating the Hot Strip Mill through the transition period. The company also reached alignment with the UK Steel Committee that production on the coke ovens and one blast furnace needed to cease by mid-2024.

“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,” Tata Steel CEO and Managing Director T V Narendran said. “This is the most viable proposal, in contrast to the unions’ unaffordable plan, which has high inherent operational and safety risk. Our proposal secures a long-term future for the business and preserves the majority of jobs in the UK.”

“We will continue to work with the trade unions over the following two 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.”

The EAF route pollutes less than the use of blast furnaces.

Tata Steel also said it expects to place equipment orders for the EAF by September and to start construction on the EAF by August 2025. Tata also said it also accepted a revised connection offer from National Grid, the UK’s power infrastructure company, and will finalize documents in the coming days to ensure it will have the power infrastructure for commissioning the EAF on schedule by end-2027.

Tata Steel UK said it had already secured most of the steel semi-products to be rerolled such as the slab and the hot rolled coil required during the transition, “to ensure a seamless service to its downstream businesses and customers.” Tata said it had agreed to details with Associated British Ports to expand slab handling and stock holding capacity in the south Wales ports.

“We have spent the last seven months openly and transparently sharing detailed business information, asset condition, maintenance plans and market forecasts with our trade union colleagues and advisers,” Tata Steel UK’s CEO, Rajesh Nair, said.

Tata Steel agreed to detailed terms with the UK government on the proposed grant package to support the GBP1.25 billion investment, with final documents to be executed in the coming weeks.

Tata’s UK blast furnaces have an installed capacity of 5 million mt/year, but in the last few years they produced 3.2 million mt/year. The EAF will have a capacity of 3.2 million mt crude steel per year.

Prices for steel hot-rolled coil in the UK fell in the week of April 11, according to Platts’ assessment, even as market participants continued to expect European mills to cut production amid low end-user demand. Platts assessed UK HRC down GBP10 to GBP605/mt basis DDP West Midlands April 11, the lowest level since December 2020.

The UK produced in total 5.62 million of crude steel in 2023, according to the latest data, one of the lowest production levels since 5.20 million-5.25 million mt produced in the Great Depression in 1931-32.