Tata Steel chairman warns decision on Port Talbot plant’s future is looming
The chairman of Tata Steel has indicated the company may have to take a decision on the future of its UK business in the next year with the blast furnace in Port Talbot approaching the end of its working life.
In March Tata Steel warned it may stop one of the two blast furnaces at the Port Talbot plant if the UK government failed to announce support for the decarbonization of the steel industry by this month.
Ministers were told that the business needed details of support by July to justify a potential multibillion-dollar investment in green steelmaking capacity at the plant.
The UK government has been in talks with both Tata Steel and British Steel to provide £300m each to invest in environmental technologies.
Decision time is nearing
“Decision time is nearing,” Natarajan Chandrasekaran told shareholders at the 116th annual general meeting of Tata Steel this week, responding to questions posed about the future of the UK business, which is seen as the weakest link in Tata Steel’s international operations.
“The blast furnace will come to the end of its life cycle in a year or so. Before that, we have to take a decision; our preference is to replace it with an EAF (electric arc furnace).”
In the note to the fourth quarter results, the company hinted at uncertainty over the level of support on offer from the UK government to enable the transition to the production of green steel from the electric arc furnace.
Mr Chandrasekaran said discussions are ongoing with multiple stakeholders, including the UK government and the unions, to arrive at the ‘‘right decision”.
“There are various options, and we are trying to see what is the right option,” he said.
The company chairman also informed shareholders that Tata Steel has completely de-risked the £6 billion British Steel Pension Scheme by securing full insurance cover for pension liabilities.
“This means that the cash flows for future pension pay-outs to pensioners are guaranteed by the insurer.
“This has been done at no cash cost to the company and eliminated any future risks to the company from asset-liability mismatches,” he added.
Port Talbot is the UK’s largest steelworks, employing around 4,000 workers, half of Tata UK’s total headcount. The installed production capacity of the plant is 5 million tonnes (mt) but it typically produces under 3 mt per year.
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The Welsh Government should nationalise it, but will probably plead powerlessness..
Need independence for that.
Need the FUNDS for that……Neil ANderson understands little….
There will be no shortage of funds after independence for things we need. The UK Government found its source when it needed to (WW2, Covid). Yes, the magic money tree, Sovereign currency… It is only political that the UK can afford nuclear arms but not decent salaries for nurses and doctors. Not economics.
You don’t necessarily need independence, you need a government (be it in Cardiff or London) which cares though. The UK government took steel into public ownership twice, and kept Richard Thomas and Baldwin’s (no relation to yours truly as far as I know) in public ownership between the two periods when the whole industry was.
But you do need massive resources ,we dont have the powers to print money ,thats the uk governments responsibility unfortunatrly.
You can count on the UK Government dithering over this and the plants both closing as a result. There is no industrial policy and do not wish to develop green steel unlike Sweden which is light years ahead.
If only the UK steel industry had a body that would offer support and financial help, like the Swedish industry has received from the EU, oh, they did, but voted to leave. €315 billion on offer from the EU fund for strategic investments( EFSI).
Exactly.