Union leaders have expressed anger at being shut out of discussions between the UK government and Tata Steel that could lead to thousands of job losses at two of Britain’s four remaining blast furnaces.
Tata, the Indian conglomerate that owns the Port Talbot steelworks in south Wales, is in talks with ministers over state aid worth between £500m and £600m to help switch the site’s two coal-powered blast furnaces to electric arc versions that can run on zero-carbon electricity.
The total investment in Port Talbot could be worth as much as £1.2bn when the company’s investment is taken into account. Sky News reported that a deal on state aid could come as soon as this week, including up to a possible 3,000 job losses in the long term as a result of decarbonisation.
Tata Steel UK, the subsidiary that runs the steelworks, does not earn enough to cover the cost of decarbonising on its own. Financial accounts published on Wednesday showed a post-tax loss of £674m in the year to 31 March - in part because of pension accounting issues. The loss before tax was £279m, compared with an £82m profit the year.
The accounts said production of liquid steel decreased from 3.5m tonnes in the 2021-22 to 3m tonnes in 2022-23, as global demand slumped.
Community, a union representing steel workers, said any deal deciding on a shift to electric arc furnaces without worker input would breach assurances given by the company.
Roy Rickhuss, the union’s general secretary, said: “This is unacceptable. We have been talking to the company for a long time about the road map to net zero, and we had received numerous guarantees that we would not be presented with a fait accompli, that there would be meaningful consultations on all options.
“If true, it would be a clear breach of those commitments, and would damage industrial relations across the business.”
Jonathan Reynolds, the shadow business secretary, said: “Only this government could spend £500m to make thousands of people redundant and deliver no safeguards on the nation’s investment. This is not a serious plan for the long term for our steel industry.”
The Port Talbot steelworks is one of the UK’s biggest emitters of carbon dioxide, so switching it to technologies with net zero carbon output is a huge challenge. The plant faces a choice between switching to electric arc furnaces, making “direct reduced iron” using green hydrogen, or continuing the blast furnaces with carbon capture and storage. Electric arc furnaces would almost certainly require significantly fewer workers.
The Department for Business and Trade declined to comment, saying the negotiations were ongoing. Tata Steel was approached for comment.
