Tata Steel said Friday that it planned to shut down the blast furnaces at Britain’s largest steel mill, in Port Talbot, Wales, and replace them with an electric furnace — a move that would cut carbon emissions but could cost 2,800 jobs.
The company, part of the India-based Tata conglomerate, says the steel mill, much of which dates back to the 1950s, has frequently lost money.
“The course we are putting forward is difficult, but we believe it is the right one,” the company’s chief executive, T.V. Narendran, said in a statement. “We must transform at pace to build a sustainable business in the U.K. for the long term.” He said Tata had invested almost 5 billion pounds (about $6 billion) in the British business since 2007, when Tata bought the mill.
Last year, the British government offered £500 million in support of Tata’s plan, which has an estimated price tag of up to £1.25 billion.
Although the announcement was not a surprise, unions representing workers at the plant said they were angry that their proposals to save jobs had been rejected. The plant, one of only two big steel mills left in Britain, employs around 4,000 people, and it was unclear how many of the job cuts would take place at Port Talbot; Tata employs around 8,000 people in Britain.
“It is an absolute disgrace that Tata Steel, and the U.K. government, appear intent on pursuing the cheapest instead of the best plan for our industry, our steelworkers and our country,” two unions, Community and GMB, said in a statement.
Tata wants to replace much of the current operation, which uses coal to extract iron from ore, with an electric furnace that makes steel by melting scrap metal in a blaze of sparks. Electric steel making, which is more common in the United States than in Europe, tends to employ fewer workers.
Tata says the shift would ensure that steel making continued at the site while cutting greenhouse gas emissions at the plant by 85 percent and Britain’s overall emissions by 1.5 percent. Britain is aiming to reach net-zero carbon emissions by 2050.
The unions expressed skepticism that an electric furnace would be capable of producing metal of sufficient quality for some demanding applications, including automobile body panels and food and beverage cans.
But what is largely at issue is the timing of the move. In November, the unions, with the aid of Syndex, a consulting firm, made a counterproposal to Tata that involved keeping one of the two blast furnaces open until 2032. They also proposed that Tata build a smaller electric furnace than planned and as well as a device called a Direct Reduction Plant, which produces raw iron through a cleaner process than a blast furnace. That iron could have been used to make higher quality metal.
The unions said that this plan would have avoided compulsory layoffs.
Tata, however, has decided to move ahead more quickly, to the disappointment of employees.
The company said it would close one blast furnace around the middle of this year and much of the rest of the plant by the end of the year. Tata also said it would embark on a “wider restructuring of other locations.”
Tata said it would supply its British processing plants with semi-finished steel from India and the Netherlands until the new furnace was in place, leading some critics to say that Britain will just be importing steel made with high carbon emissions elsewhere. Britain’s only other large remaining steel mill is in Scunthorpe in eastern England.
“We all understand that we have to get to a green industry, but this can’t be done in a matter of months” said Barrie Evans, an employee at the steelworks and an official in the Community union. “This is just off a cliff edge.”
Although Tata proposes to spend £130 million on support for employees who lose their jobs, some analysts say there has been insufficient investment in preparing the Port Talbot community, a coastal area near Swansea, for the changes.
“The net-zero transition and the green economy will feel like a cost to them rather than an opportunity,” said Joe Rossiter, policy manager at the Institute of Welsh Affairs, a Cardiff-based a research organization, speaking of the residents of the city of 35,000 and the wider area.
Surprisingly, some environmentalists were critical of the plans despite the likely emissions reductions. “The U.K. government’s lack of a forward-thinking industrial strategy has left workers high and dry,” said Friends of the Earth, an advocacy group.