Britain is to pump £500 million into Tata Steel to decarbonise its Wales site, in a deal aimed at securing the future of the country’s steel industry, but which puts as many as 3,000 jobs at risk.
The £1.25 billion total funding package for Britain’s biggest steel works includes £750m investment from Tata to pay for the switch to lower-emission electric arc furnaces from current coal-powered methods.
Britain said last Friday’s (15) deal would help to safeguard 5,000 jobs, but Tata Steel UK currently employs more than 8,000 people. It raises the prospect of 3,000 redundancies, as the lower-carbon electric furnaces are less labour intensive.
The business and trade secretary, Kemi Badenoch, said the deal was the right thing for Britain and the workforce overall.
“We are saving jobs which would have been lost. Without this investment, we would probably have seen the end of steelmaking certainly in this part of the country,” she told reporters.
India-owned Tata Steel had long warned that without government help, it could be forced to close the Port Talbot site.
Britain said the new furnaces would cut its total carbon emissions by around 1.5 per cent, noting that Port Talbot is the biggest single carbon emitter. The government has been under pressure from businesses to help fund a transition to green energy.
Company bosses have warned that Britain is falling behind the US, which has benefited from the subsidies of the Inflation Reduction Act, and the European Union, which also has incentive schemes.
Ministers said the £500m steel grant was one of the largest state support packages in UK history. The deal follows an undisclosed level of financing the government provided to the Tata Group, parent company of Tata Steel, in July to build an electric vehicle battery plant in England.
British Steel, owned by Chinese company Jingye, which operates coal-fired blast furnaces in Scunthorpe and which has about 4,000 staff, will hope it could be next in line for a grant.
Britain’s steel industry directly employs 39,800 people according to figures released by UK Steel in May, and supports a further 50,000 jobs in the supply chain.
The government said Tata Steel UK would now inform and consult with staff and unions. But the Unite trade union criticised the government for not investing more in Port Talbot and failing to secure job guarantees with Tata.
“Unite will be fighting tooth and nail not only to save these jobs but to create more jobs in steel,” Unite general secretary Sharon Graham said.
The head of the TUC umbrella body of trade unions, Paul Nowak, said the uncertainty over jobs at the plant was “the opposite of a just transition”.
“Ministers must press pause and urgently get around the table with unions” to avoid compulsory redundancies, he said.
A domestic steel-making industry is crucial to Britain’s security because it is used to build warships and fighter jets, as well as underpinning the manufacturing and transport sectors.