Steelmaker Tata Steel UK will not make any announcement about transitional decarbonisation plans for its Port Talbot facility in South Wales until after Christmas, chief executive Rajesh Nair said in an internal email, seen by Argus.
Tata was scheduled to announce the closure of its blast furnaces, coke ovens, hot strip mill and continuous annealing processing line last month, but postponed the announcement at the last minute. The delay will allow Tata to review an alternative solution provided by consultancy Syndex on behalf of trade unions.
The plan proposed by Syndex and the unions involves running the plant's blast furnace number 4 until 2032, alongside the existing downstream processing units, and moving to direct reduced iron production when possible. The scheme would preserve around 2,000 of the 3,000 jobs that would have had to be cut under Tata's original plan, according to union sources.
The company still faces significant challenges and difficult decisions, Nair said in his email. "The viability of our business depends on us getting it right. We cannot avoid the stark choice before us and, notwithstanding the tremendous efforts of our entire workforce over many years, we are still losing £1mn/d ($1.25mn/d)," he added.
The company is "rigorously interrogating all available options" to ensure it reaches the "right proposal", Nair said.
Any alternative plan would need to ensure significant financial savings, in line with Tata's original strategy that put 3,000 jobs at risk. Current union proposals, aimed at preserving as many jobs as possible, do not come close.
Union Unite last month turned its back on the "multi-union" plan proposed by Syndex in favour of its own "workers' plan". Unite's plan foresees changes to legislature that would force all UK infrastructure projects to use UK steel. Sources close to Tata suggest Unite may be trying to buy time and delay the official 45-day consultation period. Unions GMB and Community Union support Syndex's proposal.
The UK government has pledged to give Tata £500mn to help facilitate the installation of a large electric arc furnace (EAF) at the Port Talbot site. Tata agreed to invest £700mn in the project, which would be operational from 2027.
Syndex's report suggests two smaller EAFs may be more cost-effective than one larger unit, citing issues with scrap and energy supply.
A Tata spokesperson confirmed there would be no announcement about its decarbonisation transition this year.
"While we recognise the understandable concerns of our many stakeholders, we are confident that we can build a sustainable, low-carbon business that continues to support steel communities, and will be at the heart of a future green UK economy," he said.
