The UK government unveiled a support package for workers at the Port Talbot Steelworks in south Wales, as the facility undergoes a major shift towards greener production methods. Business Secretary Jonathan Reynolds revealed that employees at the steel plant, owned by Tata Steel, will receive enhanced severance terms and reskilling opportunities.
The Labour government, which came into power in July, will honor a commitment made by the previous Conservative administration to provide Tata Steel with £500 million ($650 million). This funding is intended to facilitate the transition to a new electric furnace technology, which promises reduced carbon emissions and operational changes at the plant.
Tata Steel’s plans include closing its remaining two blast furnaces at Port Talbot as part of a £1.25 billion investment in an electric furnace, which will process scrap metal and emit less carbon. The move is expected to result in the loss of approximately 2,800 jobs, with one furnace already shut down and the other set to cease production later this month. The electric furnace is projected to be operational by 2027, and the transition is anticipated to cut the UK’s industrial carbon emissions by 8% and Port Talbot’s by 90%.
Reynolds acknowledged that the support package is “not ideal” and criticized the previous government for not negotiating a more favorable outcome earlier. He also announced an additional investment of £2.5 billion (nearly $3.256 billion) in the steel industry over the coming years, which may include subsidies for energy costs.
“Steel is crucial for achieving our net-zero targets and developing the next generation of green infrastructure,” Reynolds stated. “This deal is an improvement over the previous proposal and represents the best possible outcome we could achieve in the past two months.”
The government plans to release a steel strategy next spring and has secured Tata’s commitment to consider future investments in the sector. Tata Steel’s CEO, T. V. Narendran, expressed optimism about the potential transformation of Port Talbot into a leading center for green steelmaking in Europe.
Unions representing the steelworkers have called for increased support to preserve jobs and prevent deindustrialization. In a joint statement, the Community and GMB unions described the deal as “better than the devastating plan” previously proposed but not a cause for celebration. They urged the government to review policies and ensure that decarbonization efforts do not lead to further industrial decline.
Roy Rickhuss and Gary Smith, the general secretaries of the Community and GMB unions, emphasized that “you can’t build a greener economy without a healthy steel industry.”
The closure of the blast furnaces represents a significant setback for Port Talbot, a town of around 35,000 people whose economy has long been anchored in steel production. At its peak in the 1960s, the Port Talbot steelworks employed about 20,000 people. The decline of the industry, exacerbated by competition from cheaper international producers, has seen the workforce shrink from over 300,000 in 1971 to around 26,000 in 2021. The steel sector now contributes just 0.1% to the UK economy and accounts for 2.4% of the country’s greenhouse gas emissions, according to House of Commons Library research.