Posted on 01 Dec 2016
Tata Steel and Thyssenkrupp are looking at reducing the size of Britain’s largest steel plant in Port Talbot, Wales, industry sources said, as the two firms press ahead with plans to merge their European steel operations and deal with the overcapacity afflicting the industry.
The move could see one of Port Talbot’s two blast furnaces shut, halving the plant’s capacity. Up to 4,000 people are employed at the site. An industry source close to Thyssenkrupp’s board said the German group expected the struggling plant to be downsized in the event of a merger, without specifying by how much.
Two senior officials from the Community labour union said in a message emailed to union members last week and seen by Reuters, that Tata has only pledged to keep the two blast furnaces at Port Talbot running for three years, at which point one of them is due to close in the absence of further investment.
“Three years is nowhere near enough. Our line in the sand has always been keeping two blast furnaces running (long term).
We want guarantees and besides, they’ve given us guarantees before that haven’t materialised,” said a union source.
Indian-owned Tata Steel, which employs 11,000 people in Britain, said it could not comment on speculation over its merger plans, while Thyssenkrupp declined to comment.
“The most important thing for us is that by a consolidation and by the underlying plan we can address the issues of overcapacity,” Thyssenkrupp’s chief financial officer Guido Kerkhoff said last week, in reference to the merger. The fate of the Port Talbot plant has been up in the air since Tata Steel said in March it planned to sell all of its loss-making British assets. In July, however, it announced it was in talks with ThyssenKrupp about creating a joint venture for its European operations.
Port Talbot was losing £1mil a day in the financial year which ended in March but has been making an operating profit since then, thanks to a weaker pound, higher steel prices and cost cutting.
Separately, the union chiefs said in their email that Tata Steel planned to start formal talks “within weeks” about closing its costly defined benefit UK pension scheme to future accruals.
