Tata Steel and the UK government have jointly agreed on a proposal for the largest investment in the UK steel industry for decades. But will it come at a cost?

The proposal which includes a £500m injection from government, aims to lay the decarbonisation pathway towards globally competitive and sustainable steel making in Port Talbot, UK. Commenting on the announcement, Tata Group Chairman N Chandrasekaran said: “The agreement with the UK government is a defining moment for the future of the steel industry and indeed the industrial value chain in the UK.

“The proposed investment will preserve significant employment and presents a great opportunity for the development of a green technology-based industrial ecosystem in South Wales. We look forward to working with our stakeholders on these proposals in a responsible manner.”

Tata Steel’s Chief Executive Officer and Managing Director, T V Narendran added: “Tata Steel UK has been facing significant challenges due to the heavy-end facilities approaching their end of life. The proposed project, with one of the largest investments in the UK steel industry in recent decades, provides an opportunity for an optimal outcome for all stakeholders.

“We will undertake a meaningful consultation with the unions on the proposed transition pathway in the context of future risk and opportunities for Tata Steel UK. With the support of the UK government and dedicated efforts of the employees of Tata Steel UK along with all stakeholders, we will work to transform Tata Steel UK into a green, modern, future-ready business.”

However, not all have greeted the news with optimism, with many claiming that the plans will come at enormous cost while costing thousands of jobs – the worst possible outcome. The introduction of greener technology at the site will, some claim, result in as many as 3,000 job losses.

With steel a highly energy intensive industry and a high polluter, a major part of the investment project will see the site’s current coal-powered blast furnaces (which Tata state are approaching end of life) replaced with more environmentally friendly and, crucially, less labour intensive electric arc furnaces, a move which could result in an 85% emissions reduction at the site. In doing so, the company has acknowledged a potential for a “transition period” and “deep restructuring”.

Speaking to the BBC, Kemi Badenoch, Business and Trade Secretary for the UK government said: “This is an historic package of support from the UK government. Without this investment we would probably have seen the end of steelmaking, certainly in this part of the country, possibly in the whole of the UK. The government has a transition plan in place that’s funded up to about £100m to make sure that people have skills to retrain and move on to other things if they don’t want to stay in the steel industry.”

In response, however, Stephen Kinnock, Labour MP for Aberavon, has claimed that the new electric arc furnaces will result in more job loses than is necessary and will not produce the grade of steel required by Tata’s customer base. In addition, he has stated that adequate union consultation regarding the new investment has not been forthcoming.

Again speaking to the BBC, David Rees, MS for Aberavon, said Port Talbot has a “proud history of steel making and the loss of its blast furnaces in the years ahead will see an end to traditional steel making in Wales”. He added: “Also, we cannot hide from the fact that this pathway to decarbonisation will see many steelworkers lose their livelihoods, creating hardships for families across our communities.”

Reaction among the unions has seen the planned investment described as a “devastating blow”, “disgraceful”, “short-sighted” and displays a “lack of ambition”.

Speaking to the BBC Radio 4 Today programme, Alasdair McDiarmid, Assistant General Secretary of the Community trade union, said he was: “extremely disappointed and angry” at the decision. He added: “We believe that Tata and the government’s focus has been on rushing through the cheapest and easiest deal rather than the best deal for our industry, for the workforce and for the country.”

It’s no secret that UK industry is under huge pressure to decarbonise, however, when net zero strategies have the potential to place British jobs in the firing line it further emphasises the need for a clear, concise and coherent industrial strategy roadmap to work towards – one that gives the country guidance and continuity so that, when governments change, strategy doesn’t change with them resulting in businesses and industry having to start from scratch.