Tata Steel cannot cut jobs if the £500 million government aid to electrify its furnaces is to be approved.
UK’s newly elected Labour government will demand Tata Steel UK to protect the jobs of steelworkers in exchange for financial support from the state for decarbonising its furnaces, Bloomberg reported, citing Jonathan Reynolds, the new business secretary.
Tata Steel’s Port Talbot steel production plant is seen at night time, ahead of its planned transition from blast furnace to electric arc furnaces. (Toby Melville/Reuters)
What happened with Tata Steel UK’s Port Talbot plant?
Tata steel’s UK division was planning to shut down blast furnaces at the Port Talbot plant in South Wales by September and replace them with greener, but less labor-intensive electric arc furnaces., which would result in the loss of around 2,800 jobs.
This plan was announced after the previously ruling Conservative government had pledged £500 million to support the transition, with the company itself investing £1.25 billion.
Though worker unions hoped to keep one of the furnaces running during this transition, the company said doing so won’t be possible due to the heavy losses it incurs by running the plants.
Tata Steel UK posted a loss of £364 million during the financial year 2023-24 due to the end-of-life condition of its furnaces, which also had high maintenance costs, according to an Economic Times report.
What are the plans of the new Labour government for Tata Steel as well as the British steel industry as a whole?
The new Labour government pledges to spend £2.5 billion into the British steel industry as a whole, but under two conditions: All UK infrastructure projects should use UK steel, and manufacturers must guarantee jobs for steelworkers.
“We have to make sure that decarbonization is not deindustrialization,” Reynolds said in an interview with the BBC.
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