To reduce costs and improve sustainability, Indian company Tata Steel said on Friday that it would close both of its blast furnaces at its Port Talbot, Wales, facility, which will result in the loss of 2,800 jobs.
With a half-billion pound ($634 million) investment from the British government, Tata intends to convert its coal-fired blast furnaces to electric arc furnaces, which require fewer people and produce less carbon.
As part of its aim to reorganize and improve its U.K. business, the corporation said that it will “commence statutory consultation.”
“This plan aims to reverse over ten years of losses and move away from outdated blast furnaces to a more environmentally friendly, sustainable steel business,” the statement read.
The company stated that it anticipates losing around 2,800 jobs, the majority of which will occur in the next 18 months, and that another 300 positions are at longer risk.
The news is devastating for the approximately 35,000-person town of Port Talbot, whose economy has been based mostly on the steel industry since the early 1900s.
In order to prevent job losses during the construction of the electric blast furnace, unions have demanded that one blast furnace be kept operational. Reportedly, Tata turned down their offer.
In an effort to combat job losses, the Unite union threatened to “use everything in its arsenal,” including possible strikes.
Before the influx of less expensive products from China and other nations, the Port Talbot steelworks employed some 20,000 people during its peak in the 1960s. In 1971, the British steel industry employed over 300,000 people; by 2021, that number had dropped to roughly 26,000.
The House of Commons Library’s research indicates that the steel industry currently contributes 2.4% of the nation’s greenhouse gas emissions and 0.1% of the British economy.
In 2022, Tata threatened to shut down its facilities in the United Kingdom unless it could obtain government support to transition to electric arc furnaces that produce less carbon dioxide.
The British government awarded Tata up to £504 million ($500 million) last year to upgrade the environmental aspects of the Port Talbot steelworks.
The investment will “secure a sustainable and competitive future for the U.K. steel sector,” according to the British government. “Transforming the site and protecting thousands of jobs, both in Port Talbot and throughout the supply chain,” was the stated benefit of switching to electric furnaces.
