LONDON (AP) — Britain’s government unveiled on Wednesday details of a new support package for workers who face losing their jobs at the country’s biggest steel plant ahead of its transition to a greener way of production.
Business Secretary Jonathan Reynolds said workers at the Port Talbot Steelworks in south Wales, owned by India’s Tata Steel, will be offered improved severance terms and a reskilling package if they choose.
He also said that the new Labour government, elected in July, will honor a pledge by the previous Conservative government to give Tata 500 million pounds ($650 million) to help ease the transition to the new electric furnace.
Earlier this year, Tata Steel said its plan to close its remaining two blast furnaces at Port Talbot ahead of the switch to a new 1.25 billion-pound electric furnace, which will emit less carbon and require fewer workers, will lead to the loss of around 2,800 jobs.
One of the furnaces has already closed, while the other is due to cease production later this month. Tata has said the electric furnace, which produces steel from scrap metal, will be ready by 2027. The changes will reduce the U.K.’s industrial carbon emissions by 8%, and Port Talbot’s by 90%.
Reynolds admitted that the new deal was “not ideal” as he sought to blame the previous government for failing to negotiate a better outcome with Tata much earlier in the transition process. He also confirmed that the government will invest a further 2.5 billion pounds (nearly $3.256 billion) in the industry in the years ahead, some of which may be used to subsidize energy costs.
“Steel is essential to delivering on our net zero goals and building the next generation of green infrastructure,” he said. “I believe that this is both a better deal than was on the table for Port Talbot and the maximum improvement that we could make in two months.”
Reynolds added that the government will publish a steel strategy next spring and has secured a commitment from Tata to evaluate future investment.
“With the U.K. government’s critical support, this complex and ambitious transformation of Port Talbot has the potential to make the plant one of Europe’s premier centers for green steelmaking,” said T. V. Narendran, Tata Steel’s chief executive.
Unions representing the steelmakers have been pressing the newly elected government to bolster the support and help safeguard as many jobs as possible.
In a joint statement, the Community and GMB unions said the “deal is not something to celebrate” but that it is “better than the devastating plan” previously outlined.
“Going forward the government must review existing policies and do everything in its power to ensure that decarbonization does not mean deindustrialization,” said Roy Rickhuss and Gary Smith, the general secretaries of the Community and GMB unions. “You can’t build a greener economy without a healthy steel industry.”
The announcement of the closure of the blast furnaces was a major blow to Port Talbot, a town of about 35,000 people whose economy has been built on the steel industry since the early 1900s.
At its height in the 1960s, the Port Talbot steelworks employed around 20,000 people, before cheaper offerings from China and other countries hit production. More than 300,000 people worked in Britain’s steel industry in 1971; by 2021 that fell to about 26,000.
The steel industry now accounts for 0.1% of the British economy and 2.4% of the country’s greenhouse gas emissions, according to research by the House of Commons Library.
The new assets will reduce the UK’s industrial carbon emissions by 8%, and Port Talbot’s by 90%.