Port Talbot: uncertain future for Tata Steel facility.

Monday 6th January 2020

The steelworks at Port Talbot, Wales faces an uncertain future in light of the situation outlined by Natarajan Chandrasekaran, chairman of the Tata Sons group which owns the plant’s operator – Tata Steel.

Mr Chandrasekaran told The Sunday Times this month that he needed “a situation where at least the plant is self-sustaining … we can’t have a situation where India keeps funding the losses just to keep it going.”

He elaborated, “Anybody else [except Tata] would have walked away.”

Tata Steel's pre-tax losses increased to £371m last year, a substantial increase from the 2017-18 loss of £222m.

Just a year earlier, in January 2019, Hans Fischer, then-chief executive of Tata Steel's European operations, said: "We are committed to build on our future for the UK."

Mr Chandrasekaran’s comments follow the announcement from Tata Steel in November 2019 of its plans to cut 3000 jobs across Europe, including up to 1000 in the UK.

At that time, the Financial Times said Tata Steel was under pressure from high raw material costs and a fall in steel prices, as well as the US-China trade war and slowing global growth causing a reduction in orders from key customers to European steel businesses overall.

Henrik Adam, chief executive of Tata Steel Europe, told the Financial Times that the company would aim to cut employment costs by approximately £150m and that there would be no plant closures.

Steel industry analyst Dr Kathryn Ringwald Wildman told the BBC, "The growth there is in the market is going to be in China rather than in Europe.

"I think it's now becoming clear that Tata can't afford these losses the way they are now. It can't go on, no company can sustain those losses - it's £1m per day."

In June 2019, the planned merger which would have formed a joint venture between Tata and German steelmaker Thyssenkrupp – and was hoped by both companies to generate cost savings – was blocked by the European Commission on competition grounds.

The steelworkers’ union Community blamed the job cuts on the failed merger. Its general secretary, Roy Rickhuss, said Tata’s employees “should not pay the price” for the blocked deal.

The UK steel industry is in a difficult position at this time, though 4000 jobs were saved at British Steel after its Scunthorpe plant was acquired by Chinese firm Jingye in a November 2019 agreement.

Indeed, among the reasons cited by Tata Steel in its November 2019 job cuts announcement, one of particular interest is the increased cost of emissions allowances – one which raises broader questions about the long-term future of this heavily polluting industry.