FCC

Tata Steel Announces 2,500 Job Cuts Amid Transition to Greener Production

2024-06-03

In a significant move towards sustainable production, Tata Steel is set to cut around 2,500 jobs in the UK, a decision deemed "inevitable" by CEO T V Narendran. The India-based steel giant owns the UK's largest steelworks in Port Talbot, South Wales, and employs around 8,000 people across its UK operations.

As part of its decarbonisation strategy, Tata Steel is transitioning from the blast furnace (BF) method to a low-emission electric arc furnace (EAF) process. This shift is aimed at reducing production costs and cutting down CO2 emissions by 5 million tonnes annually, with substantial support from the UK government.

However, this transition has drawn sharp criticism from workers' unions, who are actively protesting the anticipated job losses. Narendran emphasized the necessity of these cuts for maintaining competitiveness and achieving environmental goals. "All this involves 2,500 job losses, and that is what the unions obviously are not happy with. And that's a conversation going on with the unions to see how we can do it as smoothly as possible," he stated.

In September 2023, Tata Steel and the UK government agreed on a joint investment plan worth 1.25 billion pounds to support the decarbonisation efforts at the Port Talbot facility, with 500 million pounds provided by the UK government. This initiative marks a crucial step in Tata Steel's plan to complete its decarbonisation journey within the next three years.

Already, the company has closed its coke ovens in March, with one blast furnace set to shut down in June and the other in September. These closures are due to operational struggles and asset quality issues.

Narendran highlighted the strategic advantage of shifting to EAF production, citing the abundance of steel scrap in the UK, which would reduce dependency on imported raw materials and improve cost efficiency by at least USD 150 per tonne. This transition is expected to turn Tata Steel's traditionally loss-making UK operations into a cash-neutral business.

Despite the planned transition, Tata Steel reported a steep 64.59% decline in its consolidated net profit for the January-March quarter of 2023-24, primarily due to lower realizations and exceptional expenses. The company's revenues from the UK business stood at 2,706 million pounds, with an EBITDA loss of 364 million pounds for the year.

As Tata Steel navigates this complex transition, the company remains focused on balancing its decarbonisation goals with the economic and social impacts on its workforce.