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Labour met the boss of Tata Sons in Mumbai on Wednesday and urged him to give a stay of execution to traditional steelmaking at Port Talbot, holding out the promise of more state support should the party win the UK general election.
Jonathan Reynolds, shadow business secretary, told Natarajan Chandrasekaran, the chair of Tata Sons, that a future Labour government would like a delay to the closure of one of the last two blast furnaces at the Welsh site.
But shortly after the meeting, the parent of Tata Steel signalled it was unlikely to change course on a decision that would trigger the loss of up to 2,800 jobs at Port Talbot.
Reynolds had used the meeting to argue for one of the blast furnaces, which has an operational lifespan running into the early 2030s, to be retained, while Tata Steel closes the other one and replaces it with a less carbon-intensive, electric arc furnace on the site.
“That is a priority for us,” Reynolds said. “If it needs capital expenditure, we are willing to look at it.”
Under the plan announced last month, Tata plans to end traditional steelmaking at Port Talbot by closing both blast furnaces this year, resulting in heavy job losses among the site’s 4,000 workforce. The move is part of a £750mn investment by Tata Steel to decarbonise its UK operations, backed by a £500mn government grant.
It mirrors a similar announcement last year by British Steel, which will close its last blast furnaces by 2025, leaving the UK as the only major economy without the ability to make primary steel using iron ore and coal.
In his meeting with Chandrasekaran, Reynolds asked the Tata boss to reconsider a trade union-backed compromise plan which, he acknowledged in an interview with the Financial Times, would cost even more taxpayers’ money. Unions have said their plan would cost an additional £683mn.
“It was really important for him to know how important this is for us and for me personally,” Reynolds said after the meeting, claiming that a transition to less carbon-intensive steel production could be better managed.
“We care a great deal about the transition and getting it right — and having political consent for that transition,” he said. “Port Talbot is rightly seen as a prominent example of how we do that.”
But in a statement, Tata Sons said Chandrasekaran had told Reynolds that the option of running one blast furnace was “evaluated carefully” and it had concluded it was “not operationally feasible and financially not affordable”.
It added that delaying the closure would pose “significant risk to the cost and timeline of the electric arc furnace project”, adding that further investments could be evaluated once it had been built.
Reynolds said the loss of the UK’s last remaining blast furnaces would mean the country would have to import traditionally made steel from India and elsewhere for the higher grades needed by some manufacturers, with a higher overall carbon footprint.
It would be better to make it in the UK while new, green technologies were developed, he added. He declined to say how much Labour’s option to “keep primary steelmaking” might cost in additional state subsidies or how many jobs it might preserve.
Tata has not ruled out the option of building a “direct reduced iron” plant at Port Talbot in the future alongside the electric arc furnace as a way of preserving primary steel production. DRI technology uses natural gas, or potentially green hydrogen made from renewable electricity, instead of coking coal to reduce the iron ore.
Tata has said any plans for a DRI plant would require access to competitively priced gas.
