Shares of Tata Steel were edging lower on a full day of trading Saturday after the steel producer decided to cut thousands of jobs at its struggling Port Talbot plant in the UK.
What Happened: Tata Steel has unveiled a comprehensive plan to shut down its primary steel-making facilities in the UK, leading to the elimination of 2,800 jobs to seemingly steer the company toward a more financially sustainable future, seeking to reverse over a decade of losses.
The company disclosed having injected £6.8 billion (₹71,728 crore) since 2007 to sustain the British business, initially acquired as Corus Group Plc for £6.2 billion (₹65,520 crore). Tata Steel Europe, as it was later named, encompasses two primary steel operations across the UK and the Netherlands.
Why It Matters: The restructuring initiative aligns with a transition plan outlined in September 2023, when Tata secured a £500 million (₹52.8 billion) grant from the UK government. This funding is designated for establishing a scrap-based electric arc furnace with a 3 million tonne capacity and phasing out the coal-based blast furnace.
To further support this transition, Tata will invest an additional £750 million (₹79.2 billion) to construct a new steel mill by 2027. This represents the most significant investment in the UK steel industry in a decade.
Throughout this process, Tata has engaged in consultations with the UK Steel Committee and advisers since September. While the proposal to maintain a single blast furnace was considered, Tata concluded that continuing blast furnace production is neither feasible nor affordable at Port Talbot, Wales. However, the company agreed to proceed with the hot strip mill, following the committee’s suggestion.
What’s Next: Tata Steel is set to initiate a formal consultation with workers on the proposed restructuring plan and support arrangements for the affected employees. The company has proposed more than £130 million (₹13,728 million) in support packages, covering redundancy terms and community programs for the impacted workforce, which currently consists of 8,000 employees in the UK.
UK unions said they were unhappy with the announcement, threatening potential industrial action. In a statement, Union Community asserted that they would explore all options, including industrial action, and urged Tata Group and the UK government to reconsider their positions to safeguard the future of British steelmaking and prevent a major industrial dispute.
Price Action: Tata Steel’s share price was down 0.4% at ₹133.7 near the start of trade on Saturday after starting the session in the black.
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