Tata Steel to get £500 million from UK for plant in Wales

MUMBAI: The UK govt will give 500 million pounds to Tata Steel to construct a greener electric furnace at the Port Talbot site in Wales, with the Indian company paying 750 million pounds.

While the previous UK govt led by the Conservative party had agreed to give 500 million pounds to Tata Steel, no deal was signed with the company. The development comes as Tata Steel seeks to cut losses at its UK operations.

Tata Steel had acquired the UK plant as part of its acquisition of the Corus Group in April 2007 for 6.2 billion pounds and since then, the unit has hardly made any money for the company. Tata Steel has already closed one blast furnace at the Port Talbot site in July and will shut down the second one this month, making 2,500 workers redundant. While the deal with the UK govt secures the long-term future of steel making in Wales, govt was unable to secure the 2,500 jobs that Tata Steel will cut over coming months, reported the Guardian.

Under the new deal, those who will lose their jobs will receive an improved redundancy package. The electric arc furnace (EAF) - which will melt scrap steel or iron to produce steel - is greener but far less labour intensive, with about 500 jobs being created during its construction. The electric arc furnace will be operational within three years, that is by late 2027, Tata Steel said.

"With the UK govt's critical support, this complex and ambitious transformation of Port Talbot has the potential to make the plant one of Europe's premier centres for green steelmaking," said Tata Steel MD T V Narendran. "We look forward to the efficient and speedy execution of the EAF project. We will continue our work with the Transition Board and the UK and Welsh govts to enable this project to be a catalyst for economic regeneration and job creation in South Wales," he added.

For any employee in Port Talbot selected as being at-risk of compulsory redundancy, Tata Steel will provide the option for them to participate in a paid re-training scheme for a defined period to help them secure alternative future employment.