According to an official with the country’s new government, an additional £2.5 billion ($3.2 billion) will be made available for the UK steel manufacturing sector. This is in addition to the amount the government has already pledged for new furnaces at Tata Steel’s Port Talbot site.
“There is a better deal available for Port Talbot and for the steel industry as a whole, I’m sure of that,” newly appointed Business Secretary John Reynolds said on July 7 during the BBC political show “Sunday with Laura Kuenssberg.” Reynolds also said in the interview that he has already spoken to Tata Steel about the company’s plans to blow down the two blast furnaces at Port Talbot in favor of electric arc furnaces, which will tentatively result in up to 2,800 job losses at the site.
Reynolds also planned to speak with unions at the steelmaker the following week. Although he declined to give any further details, Reynolds noted that job guarantees are part of the current ongoing negotiations. Port Talbot permanently blew down BF 5 in the previous week, while it plans to blow down BF4 in September. Stay up to date on MetalMiner and steel manufacturing news like this with MetalMiner’s weekly newsletter.
td {border: 1px solid #cccccc;}br {mso-data-placement:same-cell;}New Government Brings Changes to Port Talbot Plans
Reynolds is the new Business Secretary under the Labour Government, which won the UK general election on July 4, ousting the Conservative Party after 14 years in power. Labour Party leader and Prime Minister Keir Starmer was also quoted as saying he has great concerns over Port Talbot’s future.
Tata Steel originally announced that it had reached an agreement with the UK government to receive £500 million ($641 million) toward a decarbonization project in September, which also stipulated replacing the two blast furnaces at Port Talbot with electric arc furnaces. The total listed price tag for the project was about £1.25 billion ($1.6 billion).
In January, Tata announced its plans to permanently blow down and replace the two blast furnaces before the end of 2024, stating that it would also shutter the convertor at the Port Talbot steel manufacturing plant. Reports from January also stated that the new EAFs will cut Port Talbot’s crude steel capacity to about 3 million metric tons per year, down more than one-third from its previous capacity of 4.8 million metric tons.
Port Talbot Remains Integral to UK Steel Manufacturing
Port Talbot is in southern Wales on the Bristol Channel, about 30 miles west of Cardiff, where it represents a significant component of the UK steel industry. The plant can roll up to 3 million metric tons of hot rolled coil and 1.2 million metric tons of cold rolled coil. In addition, Port Talbot can produce a total of 975,000 metric tons of annealed steel.
The Llanwern plant, which lies about 50 miles east of Port Talbot, also uses rolled and semi-finished products from Port Talbot as feedstock to roll about 3.2 million metric tons of hot rolled coil in 1.2-2.5mm gauges and 1.5 million metric tons of cold rolled coil in 0.3-3mm gauges. The site also has a hot dipped galvanizing line with a capacity of 360,000 metric tons.
As far as the changeover goes, one company official told MetalMiner that the rolling sites at Port Talbot will receive feedstock from other Tata assets while Port Talbot’s steelmaking operations are off-stream. The official added that Llanwern will also continue operating while Port Talbot’s hot end is off-stream, and will receive hot and cold rolled coil from the main plant.
Accurately report the impact of steel market volatility on your earnings to leadership and executive teams with MetalMiner’s Monthly Metals Outlook. Review a free sample report and then subscribe.
Unions Still Eager to Discuss the Details of the Changeover
Unions associated with the steel manufacturing plant initially proposed to keep BF 4 operating until 2032, when its campaign was due to end. This would allow Tata to build one smaller EAF and then decide between constructing a second or an open slag bath furnace. However, Tata rejected the proposal on the grounds of cost and safety.
While the Unite trade union voted for strike action in April, Tata confirmed they would be ready to resume discussions on a potential Memorandum of Understanding through the Multi-Union Steel Committee, the London-headquartered Community union.
“The truth is Tata never walked away from those discussions, and at our last meeting on May 22, all unions agreed to conclude the negotiations and put the outcome to our members,” the union said in a July 1 announcement.
“Community will welcome resuming those discussions, but we regret that zero progress has been made since May 22,” the announcement also noted.
Subscribe to MetalMiner’s free Monthly Metals Index report and use it to anticipate market changes and make strategic steel purchasing decisions.
