Port Talbot: Tata steelworks could close without subsidy deal

The owner of the UK's biggest steelworks has warned its sites could be shut without subsidies for reducing carbon emissions, reports claim.

Tata Group wants to reach a deal for the UK government to provide £1.5bn towards this, the Financial Times says.

The UK's biggest steelworks, in Port Talbot, employs 4,000 people.

The UK government said steel "plays a critical role" in the UK economy and Tata was "a valued steel producer and significant employer".

It comes as Tata's former head of strategy, Nirmalya Kumar, told BBC Wales the Port Talbot plant had not been profitable for 15 years and his answer would be to "close it down".

• Call to help steel firms decarbonise

• Industry's 23 million tonne carbon problem

Speaking to the FT, Tata Group chairman Natarajan Chandrasekaran said: "A transition to a greener steel plant is the intention that we have . . . But this is only possible with financial help from the government.

"We have been in discussions over the last two years and we should come to an agreement within 12 months. Without this, we will have to look at closures of sites."

The report says Tata wants to close two blast furnaces at Port Talbot and build two electric arc furnaces, that will be less carbon intensive.

However, the FT adds this process will cost about £3bn, with Tata seeking £1.5bn from the UK government.

Thousands of Welsh jobs are linked to Port Talbot steelworks

Mr Kumar said when he left Tata in 2016 the losses had "skyrocketed to £1m a day".

"It's not a problem that has happened in the last year, it has been a problem for the last 15 years," he said.

The current professor of marketing at Singapore Management University said he believed the site needed government support for a profitable future.

"As a dispassionate business person the answer is to close it down," he explained.

"The other perspective is we can continue and there is a path to profitability if it is converted into a more efficient process. Having said that we can't justify the investment as a business person unless the government participates."

Union Unite said it had "grave concerns" about the situation, with national officer Tony Brady saying: "The words of Mr Chandrasekaran will hang heavy over the steel towns of Wales this morning, and in particular at Port Talbot.

"The steel industry is central to the economy of Wales and as a critical foundation industry must be maintained at all costs."

Steel is currently responsible for 14% of the climate-warming gases produced by UK industry

A spokesman for the Community union said: "This intervention from Tata is shocking, and has been made without any consultation with the trade unions.

"For months we've been in discussions with the company, but we should be clear there is no agreement on the decarbonisation roadmap."

The spokesman said its experts had been exploring low carbon options that will protect steelmaking in the UK, adding: "That process is unfinished, but Tata's comments make a mockery of the company's commitments to an open and transparent dialogue with the unions."

Tata Steel employs about 6,600 people in Wales

Responding to the news, Aberavon MP Stephen Kinnock said the steelworks in Port Talbot made the "best steel money can buy".

Mr Kinnock described the plant in Port Talbot as being "a huge part of the pride in our community", where thousands are employed "in good relatively well paid jobs".

He told BBC Radio Wales that "we have to do whatever it takes" to keep steelmaking in the town, and added: "If we don't have a partnership, an industrial partnership on strategy between government and industry. You are not going to be able to make any of the changes not just in the steel industry but across the board.

"There isn't a single country in the world where the government isn't partnering with industry to make this stuff happen, so I think the steel workers in my constituency are going to be waking up this morning with yet another worrying story.

"We've been in this constant state of flux in the steel industry."

• Regulator accused of failing steel pension members

• Poo converts CO2 to useful chemicals

In total, Tata employs 8,000 people across the UK, with half of these in Port Talbot, and thousands more indirectly through the supply chain.

Like all industrial groups that emit carbon dioxide, it has been asked to cut these, and executives have been in discussion with the UK government.

Charlotte Childs from the GMB union told the FT: "This is deeply worrying news.

"UK steel is a critical part of the nation's industrial infrastructure and central to our national security . . . It's essential the government act quickly and show they are serious about this vital industry."

A UK government spokesman said: "Steel plays a critical role in all areas of the UK economy and Tata is a valued steel producer and significant employer in the UK.

"Our ongoing support for the sector's low-carbon transition includes the £289m Industrial Energy Transformation Fund and more than £1bn to help with energy efficiency, decarbonisation, low-carbon infrastructure and for research and development."

The Welsh government said a "successful, low carbon future" for Welsh steel was "entirely possible".

It called the industry "a crucial cornerstone to our economy", adding: "We have repeatedly called on UK ministers to urgently bring forward a package of support to secure steel-making at Port Talbot."