Loss of jobs for around 2,500 workers at Tata Steel‘s operations in the UK, which are in a transition phase, is “inevitable”, the company’s CEO T V Narendran said.
As reported by PTI, concerns about potential job losses have led to criticism from workers’ unions, prompting ongoing protests against Tata Steel in the UK. Tata Steel, an India-based company, operates the largest steelworks in the UK, with a capacity of 3 million tonnes per annum, located in Port Talbot, South Wales.
The company employs approximately 8,000 people across its operations in the country. As part of its efforts to reduce carbon emissions, Tata Steel is transitioning from the blast furnace route to the low-emission electric arc furnace process, which is nearing the end of its life cycle.
Also Read: Are Tata Steel’s Europe operations close to a turnaround?
Speaking to PTI, Narendran said the transition to EAF with the UK government aid will make the company competitive in terms of reduced production cost, and also help in reduction of 5 million tonnes of Co2 per year.
“But all this involves 2,500 job losses and that is what the unions obviously are not happy with. And that’s a conversation going on with the unions to how can we do it in a smooth as possible way. It is inevitable,” he said.
In September 2023, Tata Steel and the UK government reached a mutual agreement on a joint investment plan totaling 1.25 billion pounds. The funds are earmarked for the implementation of decarbonization initiatives at the Port Talbot steelmaking facility in Britain. Notably, the UK government contributed 500 million pounds towards this investment.
Also Read: Tata Steel announces dividend of ₹3.60 per share; check record date and other details
Sharing the updates on the UK operations, Narendran further said the coke ovens were already closed in March. One blast furnace will close in June because it is operationally struggling, and the second blast furnace will close in September for reasons of asset quality as well as for reasons of financial bleed.
“We want to transition to EAF production because the UK has a lot of steel scrap. It is one of the few countries which is a big exporter of steel scrap. So, it makes sense to use scrap available in the UK to make steel in the UK to sell to customers in the UK, as compared to importing iron ore and coal from all over the world,” he said.
“Making steel through EAF process will make Tata Steel competitive by at least USD 150 a tonne. So, the UK business, which has traditionally lost money for the company, can become EBITDA positive and cash neutral once completion of this transition,” he said.
The CEO earlier said Tata Steel aims to complete the decarbonisation journey at its plant in the UK in the next three years.
In the UK business, annual revenues amounted to 2,706 million pounds, with an EBITDA loss of 364 million pounds. For the January-March quarter, revenues totaled 647 million pounds, with an EBITDA loss of 34 million pounds.
Tata Steel reported a significant decline of 64.59% in its consolidated net profit for the January-March quarter of 2023-24. The profit stood at ₹554.56 crore, attributed to lower realizations and expenses on certain exceptional items. In comparison, the company had posted a profit of ₹1,566.24 crore in the same period the previous year.
(With inputs from PTI)
You are on Mint! India’s #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!
Download The Mint News App to get Daily Market Updates.
Published: 02 Jun 2024, 12:18 PM IST
