Tata Steel closure: can British steel recover?

Tata Steel announced the closure of the two remaining blast furnaces at its Port Talbot steelworks, at a cost of up to 2,800 jobs in a town of 32,000 people. 

The Indian-owned firm said that it was restructuring the UK's largest steelworks to cut its losses, and as part of a shift to less carbon-intensive methods of production. It will now spend £1.25bn, including a £500m UK government grant, building a new electric arc furnace (EAF) at the plant. This will produce the same amount of steel as the blast furnaces (three million tonnes a year), but will require far fewer people to operate it.

Tata said its decision had been "difficult" but necessary to safeguard its UK operations, which lose about £1.5m a day. The firm currently employs about 8,000 people in Britain, including 4,000 in south Wales. Unions said the closures were "devastating" for Port Talbot. At its 1960s peak, the town's steelworks employed nearly 20,000 people.

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What did the commentators say?

The closure of Port Talbot's two blast furnaces is a gut punch to British industry, said The Guardian. It will lead to massive job cuts in an already deprived area; and it will leave Britain as the only G20 economy unable to make its own virgin steel (the EAF relies on having supplies of scrap steel, which it recycles). It makes sense for industries to innovate, said the Daily Mirror. But ministers should challenge any step that results in the loss of so many jobs.

Port Talbot is a victim of net zero "madness", said The Daily Telegraph. True, the closure of the blast furnaces will reduce Britain's carbon output by 1.5%; but that's likely to be offset by the fact that, until the EAF opens in 2027, the UK will be reliant on imports from places such as China, where steel is made using dirty energy.

This isn't solely about net zero, said The Sunday Times. Switching to an EAF also makes commercial sense. Parts of the works at Port Talbot are close to the end of their lives, and customers increasingly want steel with "greener credentials". Even so, it's time that governments started being more honest with voters about the costs of going green.

Steel has been mass produced in Wales since the 19th century, said Matthew Lynn in The Daily Telegraph. The industry "propelled the industrial revolution", and survived the Depression and 1970s hyperinflation. But now, it has met a challenge it can't overcome: net zero. The transition to a carbon neutral economy was meant to "unleash a wave of investment", fuelling growth and creating high-quality jobs. It hasn't happened: taxpayers are "footing the bill", and instead of "well-paid green" jobs we're seeing "green redundancies".

The net zero dash has hit British industry hard, said Andrew Neil in the Daily Mail. UK electricity prices have doubled in the past decade, owing in part to the cost of sourcing it from renewables. Yet ministers are so keen to keep on this path that they gave Tata £500m to help it install an EAF – in effect, paying the firm to "shed jobs". As for Labour, it promises to pursue net zero even more zealously, regardless of its impact on the blue-collar workers it claims to represent.

"The end of traditional steelmaking is neither an act of corporate villainy nor an example of out-of-control environmental wokery," said Matthew Brooker on Bloomberg. On the contrary, it merely reflects reality. British steel has been in decline for 50 years: China now makes 35 times as much steel a year as the UK industry did at its peak. Moving to cleaner EAFs, which can make use of the vast quantities of scrap steel that Britain currently exports, will protect an industry that could otherwise be lost.

None of this will bring solace to those losing their jobs in Port Talbot, said Jeremy Warner in The Sunday Telegraph. Many of them will never work again. But continuing to subsidise the production of steel, of which there is a global surplus, makes no sense. The furnaces may seem symbolic of a "glorious past of economic prowess"; but their closure represents our economic evolution. "The jobs of the future lie not in digging up coal or stoking blast furnaces, but in the service-based industries" that the UK excels in today.

What next?

About 2,500 jobs will go at Port Talbot within the next 18 months, most of them by September. About 300 more could be lost over a three-year period, including at Tata's processing facilities in Llanwern, near Newport. Tata's plans will now go to consultation. Unions had proposed keeping one blast furnace open until 2032, at a cost of £650m, and have not ruled out industrial action.

They have accused Tata of "hypocrisy" because it is preparing to open a new blast furnace in India – despite having cited cutting carbon emissions as one of its reasons for shutting Port Talbot's furnaces.