Concern is mounting that Tata Steel will confirm plans to shut down much of its production at the Port Talbot steelworks during a crunch meeting with trade unions, putting thousands of jobs at risk.
Three sources said they believed that Tata Steel Europe, owned by the Indian conglomerate Tata, was on the brink of confirming plans to close Port Talbot’s two blast furnaces, ending more than a century of making steel from scratch in south Wales.
Tata was expected to say in November that it would deactivate the steelmaking operation, while it spends four years building electric arc furnaces, a greener, cheaper electric alternative.
But at the last minute the company postponed official confirmation of the closures, which unions say could cost 3,000 jobs directly, and hundreds more in the wider community. Port Talbot employs about 4,000 workers.
Trade unions representing steelworkers, led by the GMB, Community and Unite, have since put forward separate proposals to keep the plant operating during the transition.
But two industry sources said they feared Tata could push ahead with its original proposals and might confirm its intentions at a meeting of the UK steel committee, which includes the company and unions.
At the meeting, held at noon on Thursday in London, the company is expected to say it cannot afford a proposal drawn up on behalf of the GMB and Community unions by the consultancy Syndex.
That plan would protect 2,000 jobs and keep the blast furnaces open during the four-year transition period, with at least one continuing to run hot until 2032.
An industry source said this would cost Tata Steel Europe more than £1bn during the transition to greener production, based on the UK operation losing £1m a day.
A senior Westminster source said they believed “something bad” was coming this week for the future of Port Talbot.
Any plans involving job losses would be particularly controversial politically, given the construction of Tata’s electric arc furnaces, which make steel from scrap rather than raw materials, is to be funded by £500m of taxpayer subsidy alongside the company’s own £750m investment.
A Tata spokesperson declined to comment on what it would say on Thursday, instead reissuing an earlier statement. “We have recently announced a joint agreement between Tata Steel and UK government for a proposal to invest in state-of-the art electric arc furnace steelmaking in Port Talbot,” the spokesperson said.
“We are committed to meaningful information sharing and consultation with our trade union partners about the plan to develop sustainable steelmaking in the UK and to find solutions for concerns they may have. While those discussions are ongoing it would not be appropriate to comment further.”
Stephen Kinnock, whose Aberavon constituency includes the Port Talbot steelworks, said: “Steel is critical for our national security, good local jobs, and for the transition to a greener economy – and we need our steel to be made here in the UK, otherwise we become reliant on imports controlled by hostile regimes.
“That’s why the Tata-Tory ‘bad deal for steel’ is such an affront to all those who understand the steel industry – because it will limit the quality and quantity of steel we can make in Port Talbot, and in doing so cost thousands of jobs.”
If both blast furnaces are turned off, activities such as rolling of imported steel slab or coil could continue.
But pausing production would send a grim signal for British steelmaking, in a crunch year for the sector, which is at a “crossroads” from which it will either thrive or continue in managed decline, say industry figures.
In Scunthorpe, the UK’s only other blast furnace site, the owner of British Steel, the Chinese industrials company Jingye, is planning a similar £1.25bn conversion to electric arc furnaces that has raised separate questions over the future of about 2,000 workers.
When Jingye rescued British Steel in 2020, it promised a “new chapter” in UK steelmaking. It, too, is expected to ask for £500m in government support for its plans.
Should both Scunthorpe and Port Talbot close down their blast furnaces, the UK would be the only economy in the G20 with no ability to make steel from scratch, a process that produces high quality steel grades for specific uses.
In the meantime, Britain would rely on imported steel for the aerospace and automotive sectors and to make hundreds of miles of railway track.
Buyers of Port Talbot steel, such as Nissan’s Sunderland automotive factory, and canning producers such as the baked bean maker Heinz, would have to look elsewhere for steel.
In the long term, electric arc furnaces can replicate some of these higher grades but it is much more difficult to do so and requires very high quality scrap.
The sector has complained bitterly about sky-high energy costs, which far exceed the prices paid by European rivals in an extremely energy-intensive sector.
Rocketing costs have cemented a longer-term decline since 1971, when the UK produced 25m tonnes of steel compared with about 6m tonnes today.
The decline has meant a fall in jobs too, from more than 250,000 to just under 34,000.
• This article was amended on 18 January 2024. A previous version incorrectly said that Tata was owned by the Ruia brothers. In fact, the company is controlled by trusts set up by the Tata family.
