Tata Steel To Shut Port Talbot Blast Furnaces As Part Of U.K. Restructuring Plan
Up to 2,800 employees expected to be potentially affected, out of which around 2,500 roles will be impacted in next 18 months.
Tata Steel Ltd. will shut down two high-emission blast furnaces and coke ovens in the U.K.'s Port Talbot plant, as part of plans to reverse more than a decade of losses and transition to greener business operations.
The blast furnaces will close in a phased manner, with the first blast furnace closing around mid-2024. The remaining heavy-end assets will wind down during the second half of 2024, the company said in an exchange filing on Friday.
Tata Steel will commence statutory consultation to restructure its loss-making U.K. business.
Up to 2,800 employees are expected to be potentially affected, out of which around 2,500 roles would be impacted in the next 18 months, the Tata Group company said.
The company is the largest steelmaker in the U.K., with primary steelmaking at Port Talbot in south Wales that employs more than 8,000 people and has an annual crude steel capacity of 5 million tonne.
Under the transformation plan, Tata Steel will invest £1.25 billion in Electric Arc Furnace technology at the plant and undertake asset upgrades to secure long-term, high-quality production.
The investment will involve £500 million from the U.K. government. The company has begun engineering design work and construction planning for the project.
The plans follow detailed discussions with the British trade union representative body, U.K. Steel Committee, and its advisors.
Despite their demand to keep the blast furnace running, the company said its continued production is not feasible or affordable.
"The course we are putting forward is difficult, but we believe it is the right one," TV Narendran, chief executive officer and managing director, said in a statement.
"... we must transform at pace to build a sustainable business in the U.K. for the long-term. Our ambitious plan includes the largest capital expenditure in U.K. steel production in more than a decade, guaranteeing long-term, high-quality steel production in the U.K.," he said.
Tata Steel will utilise imported semi-finished steel from its plants in the Netherlands and India to keep supplies going until the commencement of Electric Arc Furnace production.
Tata Steel's British steelmaking operations have struggled for years to turn a profit. Sales in Europe have been sluggish amid rising cost pressure and competition from Asian imports.
The U.K. unit reported an Ebitda loss of Rs 1,367 crore in the quarter ended September. The company took an impairment charge of Rs 12,560 crore in standalone and Rs 2,746 crore in consolidated financial statements, according to an investor presentation.
It also took a charge towards restructuring and other provisions of Rs 3,612 crore in consolidated financial statements.
The Mumbai-based steelmaker will announce its third quarter results on Jan. 24.
Tata Steel shares closed 2.4% higher at Rs 134.20 apiece on the BSE on Friday, following reports of the restructuring plans, halting a two-day decline.
