Workers at UK’s largest steelmaker get better redundancy pay ahead of green transformation

LONDON (AP) — The U.K. government on Wednesday revealed details of a new support package for workers at risk of losing their jobs at the country’s largest steel mill ahead of a switch to a greener production method.

Business Secretary Jonathan Reynolds said workers at Port Talbot Steelworks in south Wales, owned by Indian giant Tata Steel, would be offered improved redundancy pay and a retraining package if they chose to do so.

He also said the new Labour government, elected in July, would keep a promise made by the previous Conservative government to give Tata 500 million pounds ($650 million) to help it switch to a new electric furnace.

Earlier this year, Tata Steel said its plan to close its two remaining blast furnaces at Port Talbot before switching to a new £1.25 billion electric blast furnace that will emit less carbon dioxide and require fewer workers would result in the loss of about 2,800 jobs.

One of the furnaces has already been closed and the other is due to cease production at the end of this month. Tata said the electric furnace, which produces steel from scrap, would be ready by 2027. The changes would cut the UK industry’s carbon emissions by 8% and by 90% at Port Talbot.

Reynolds admitted the new deal was “not perfect” as he sought to shift blame to the previous government for failing to negotiate a better deal with Tata much earlier in the transition. He also confirmed the government would invest a further £2.5 billion (nearly $3.256 billion) in the industry over the coming years, some of which could be used to subsidise energy costs.

“Steel is essential to delivering our net zero emissions targets and building the next generation of green infrastructure,” he said. “I believe this is both a better deal than what was on the table for Port Talbot and the biggest improvement we could make in two months.”

Reynolds added that the government will publish a steel strategy next spring and has obtained a commitment from Tata to assess future investment.

“With the key support of the UK Government, this complex and ambitious transformation of Port Talbot has the potential to make the site one of Europe’s leading green steelmaking hubs,” said TV Narendran, Chief Executive Officer, Tata Steel.

Unions representing steel producers have been pressing the newly elected government to increase support and help protect as many jobs as possible.

In a joint statement, Community and GMB unions said there was “no reason to celebrate this deal” but that it was “better than the devastating plan” put forward earlier.

“Going forward, the government must review existing policies and do everything it can to ensure that decarbonisation does not mean deindustrialisation,” said Roy Rickhuss and Gary Smith, general secretaries of the Community and GMB trade unions. “You cannot build a greener economy without a healthy steel industry.”

The announcement of the blast furnace closure was a huge blow to Port Talbot, a town of about 35,000 whose economy has been based on the steel industry since the early 20th century.

In the 1960s, Port Talbot employed around 20,000 people before production was absorbed by cheaper offers from China and elsewhere. In 1971, the British steel industry employed over 300,000 people; by 2021, that had fallen to around 26,000.

According to research from the House of Commons Library, the steel industry currently accounts for 0.1% of the UK economy and 2.4% of the country’s greenhouse gas emissions.

The new assets will reduce the industry’s carbon emissions by 8% in the UK and by 90% in Port Talbot.