UK Government in talks with Tata Steel for £500m aid package

The UK Government is reportedly in advanced talks with Tata Steel, Britain’s largest steel producer, to hand over a £500m aid package aimed at securing the long-term future of steelmaking in South Wales.

Sky News reports that Whitehall officials and Tata Steel are close to agreeing on a deal that would commit more than £1bn to the future of its Port Talbot steelworks, which could ultimately result in thousands of job losses.

Tata Steel, which has its primary steelmaking operations at Port Talbot, also supports manufacturing and distribution operations at sites across Wales, including Shotton.

It is the largest steelmaker in the UK, employing about 4,000 people at Port Talbot, roughly half of its overall UK workforce of approximately 8,000.

Sources indicated that the terms of an agreement were subject to change, but there were hopes of finalising the deal as early as this month.

One insider told Sky News that Tata Steel had been trying to persuade the government to increase the proposed funding package in recent weeks.

Under the currently envisaged plans, the UK government would commit approximately £500m of public funding to the company, while Tata Steel’s Indian parent would sign off £700m of capital expenditure over a multi-year period.

Industry sources close to the discussions said that the company had indicated that over the long term, as many as 3,000 of its British-based staff were likely to lose their jobs.

Electric arc furnaces, which Tata Steel would commit to building as part of the agreement with the government, utilise different, less labour-intensive processes to produce steel than traditional blast furnaces.

The UK government is said to have accepted during the discussions that some job losses would be inevitable as part of the transition to reducing carbon emissions.

However, an insider said on Saturday that a number of those could be through workers taking early retirement.

A spokesperson for Community, the steelworkers’ union, said:

“We remain in discussions with the company and the unions have not agreed any decarbonisation strategy for Port Talbot. We continue to support a solution that will maintain blast furnace production and safeguard the future for all the UK plants. We are ready to use all means at our disposal to protect jobs and our vital strategic industry.”