2,500 job cuts! Layoffs in Tata Steel’s UK operations inevitable, says CEO Narendran

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. Fear of job losses has attracted criticism of the workers’ unions and they are continuously protesting against the company in the UK. India-based Tata Steel owns the UK’s largest steelworks of 3 million tonne per annum (MTPA) at Port Talbot in South Wales and employs around 8,000 people across all its operations in that country.

As part of its decarbonisation plan, the company is shifting to low-emission electric arc furnace (EAF) process from the blast furnace (BF) route which is nearing its end of life cycle.

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 agreed on a joint investment plan of 1.25 billion pounds to execute decarbonisation plans at Port Talbot steel making facility in Britain. Of the 1.25 billion pounds, 500 million pounds was provided by the UK government. 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.

“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.

Tata Steel aims to complete decarbonisation journey at its plant in the UK in next three years, the CEO had earlier said.

Annual revenues from the UK business were 2,706 million pounds and EBITDA loss stood at 364 million pounds. For the January-March quarter, revenues were 647 million pounds and EBITDA loss stood at 34 million pounds.

Tata Steel on Wednesday reported a 64.59 per cent decline in its consolidated net profit at Rs 554.56 crore for the January-March quarter of 2023-24 on lower realisations and expenses on certain exceptional items.

The steel major had posted a profit of Rs 1,566.24 crore in the year-ago period.