Tata Steel announced on April 25 that the steelmaker will proceed with its
£1.25-billion investment to build an electric arc furnace in Port Talbot, replacing two blast furnaces and commence closure of the existing heavy end assets in the following months.
Tata Steel said it has informed the trade unions that Port Talbot’s two Blast Furnaces No.5 and No.4 will close by the end of June, and by the end of September, respectively. This is in contrary to the union's plan which would have kept a blast furnace in operation while building an electric arc furnace.
However, the steelmaker pointed out that the alternative plan presented by the union would involve additional costs of at least £1.6 billion and that t building a new electric arc furnace while continuing to operate the existing
steel melting shop is high-risk and complex and will delay the transition by two years.
"Having looked carefully at all the options over the past seven months
in consultation with union representatives, we have decided to proceed with our proposed restructuring and transition. This is the most viable proposal, in contrast to the unions’ unaffordable plan which has high inherent operational and safety risk," said Tata Steel’s CEO and Managing Director,
Mr. T V Narendran.
According to UK media outlets, unions have warned of a bitter fight ahead. Tata Steel said it would open a voluntary redundancy scheme on 15 May.
Earlier in the year, the company announced plans to shut down the two blast furnaces in its Port Talbot Steelworks in Wales, UK in phases, a move that may affect up to 2,800 jobs, citing loss incurred from the operations and a shift to greener goals.
Tata Steel UK recorded a negative EBITDA (earnings before interest, taxes, depreciation, and amortization) of £373 million and negative free cashflow of £623 million in FY23-24, the steelmaker said.
Focus on electric arc furnace
The steelmaker said it has begun preparations to place equipment orders for the electric arc furnace by September 2024, begin enabling and preparatory works at the site by December 2024, and based on current permitting timelines, begin construction on the project by August 2025.
Steelmakers are pivoting towards electric arc furnaces because they are more energy-efficient, environmentally friendly, and flexible in using recycled materials compared to traditional blast furnaces.
The steelmaker said it has accepted an updated connection offer from National Grid, the UK’s power infrastructure company, and will be finalising documents in the coming days, ensuring the power infrastructure is in place to commission the electric arc furnace on schedule by end-2027.
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