India’s Tata group owns the huge Port Talbot steelworks in south Wales, which employs around 3,500 people and is one of only two in Britain capable of turning iron ore and coal into molten iron and steel. In total, the group’s subsidiary Tata Steel UK (TSUK), which earlier this week reported its first annual profit since 2009, employs around 8,000 people in the UK. The company is in protracted talks with the government about co-investing in the conversion of Port Talbot’s two blast furnaces to electric arc furnaces, which produce much lower carbon emissions. Talks had initially focused on Tata’s attempt to negotiate around £500m in government funding. However, the Financial Times reports that the company is seeking up to half of the £3 billion cost of the conversion and decommissioning process. “Moving to a greener steel plant is our intention… But this is only possible with financial help from the government,” Tata Group chairman Natarajan Chandrasekaran told the FT. “We have been in discussions for the last two years and should reach an agreement within 12 months. Without that, we will have to consider closing the sites.” The decarbonisation plans will include the closure of the two blast furnaces, which will stop primary steel production, as the two electric arc furnaces are built. Tata wants to start the conversion process in 2025. Unions fear job losses since it takes about two years to build an electric arc furnace and requires fewer workers. “Our steel members have been suffering for years,” said Charlotte Childs, national officer at the GMB union. “Tata and the government must protect and safeguard the industry as soon as possible.” Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Despite its return to profitability, the company said it still needed the support of the UK government for its steelworks to remain viable in the long term and to switch to greener production methods. “TSUK continues to have discussions with the UK Government to seek support for the transition to low-carbon steel production, which is vital to ensuring a long-term sustainable future for the business,” it said. About 80% of the UK’s steel is made in blast furnaces at two sites: Tata’s Port Talbot plant and a British Steel plant in Scunthorpe, Lincolnshire. “Steel plays a critical role in all sectors of the UK economy and Tata is a valuable steel producer and major employer in the UK,” a UK government spokesman said.
