Tata blast furnaces in the UK to be idled

The Tata Steel UK Ltd. business unit of the India-based Tata Sons conglomerate has issued a statement announcing it intends to move forward with its plan to idle its blast furnace/basic oxygen furnace (BOF) capacity and install recycling-based electric arc furnace (EAF) technology.

The United Kingdom has been a ferrous scrap surplus nation, while its coal mining capacity has been diminishing for decades. “This plan is intended to reverse more than a decade of losses and transition from the legacy blast furnaces to a more sustainable, green steel business," Tata Steel UK says.

Tata Steel UK, the U.K. government and labor unions with a presence in the BOF mills were engaged in discussions that resulted in a tentative agreement last September to fund and finalize the BOF-to-EAF transition.

“The plans follow detailed discussions with the U.K. multitrade union representative body (UK Steel Committee) and its advisors, in which Tata Steel carefully considered their endorsed proposal for maintaining a single blast furnace," Tata Steel UK says. "Having considered that proposal, Tata Steel UK has agreed to adopt elements of it but considers that continued blast furnace production is not feasible or affordable.”

The company now will commence statutory consultation as part of its plan to transform and restructure its U.K. business. Up to 2,800 employees are expected to be potentially affected, out of which around 2,500 roles would be impacted in the next 18 months.

On the personnel front, the company will commit more than $165 million to “a comprehensive support package" for affected employees, including redundancy terms, community programs, skills training and job-seeking initiatives. This is in addition to the $127 million funding for the Transition Board set up with U.K. and Welsh governments to support affected employees, contractors and communities. (The Tata Steel BOF mill is in Port Talbot, Wales.)

“The transformation would secure most of Tata Steel UK’s existing product capability and maintain the country’s self-sufficiency in steelmaking while also reducing Tata Steel UK’s CO₂ emissions by 5 million metric tons per year and overall U.K. country emissions by about 1.5 percent," Tata Steel UK says.

Plans involve closing Port Talbot’s two blast furnaces and coke ovens in a phased manner, with the first blast furnace closing around mid-2024, while the remaining heavy-end assets would wind down during the second half of 2024.

Converting to EAF technology in Port Talbot will involve a $1.59 billion investment by Tata Steel UK and the U.K. government, according to the firm, as it engages in asset upgrades to secure long-term, high-quality production at the U.K.’s largest steelmaker.

The company says its planned mill conversion is supported by the U.K. government, which has committed up to $635 million toward the project. Tata Steel UK plans to invest more than $950 million in the conversion, in addition to its support package for affected employees.

Tata Steel UK says it had carefully considered the UK Steel Committee’s endorsed proposal for partial continuity of blast furnace steelmaking assets until EAF capacity was installed in Port Talbot.

However, an analysis it commissioned concluded that continued blast furnace production while constructing the new EAF capacity was not feasible for numerous reasons:

• the projected operating costs of such a configuration are financially unaffordable;
• installing the EAF equipment in an already operating steel melt shop would be “fraught with risk, significantly increasing costs, creating a sub-optimal plant layout, delaying implementation of the plan and jeopardizing the proposed business transformation program;” and
• the “near end-of-life condition and deteriorating operating performance” of several steelmaking assets in Port Talbot was problematic.

To have the EAF capacity up and running in 2027, Tata Steel UK is in advanced planning discussions with electricity provider National Grid in relation to enabling infrastructure and also has begun engaging with the local authority and regulators.

“The course we are putting forward is difficult, but we believe it is the right one,” says TV Narendran, Tata Steel CEO and managing director. “Having invested almost $6.35 billion in the U.K. business since 2007, we must transform at pace to build a sustainable business in the U.K. for the long term. Our ambitious plan includes the largest capital expenditure in U.K. steel production in more than a decade, guaranteeing long-term, high-quality steel production in the U.K. and transforming the Port Talbot facility into one of Europe’s premier centers for green steelmaking.”

The company says its EAF capacity would be fed by predominantly U.K.-produced scrap, adding that the “transition mirrors the successful installation of such low-carbon production facilities in other major steel-producing markets such as the United States, where it has cut emissions while guaranteeing production of complex, high-quality steel.”

In the U.K., much of the coverage of the announcement has focused on the elimination of jobs. A report from BBC, in addition to getting reactions from affected workers, quotes Welsh Secretary David TC Davies as saying, “Tata were always very clear—that they were either going to close the plant completely, and that would’ve cost 8,000 jobs, or that they might be able to save jobs through an arc furnace.”