Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Tata Steel is considering closing two blast furnaces at its loss-making Port Talbot plant in Wales and switch to electric arc furnaces – a move aimed to secure the United Kingdom (UK) government’s bailout fund for companies hit due to Coronavirus, local media reported. 

The company intends to drive efficiency at the plant as the UK operations faced structural challenges amid COVID-19 related disruptions, a spokesperson for Tata Steel Europe said. This move would enable UK operations to create a sustainable, decarbonised footprint for the future.

The initiative would, however, could lead to mass unemployment, especially during the refurbishment of furnaces which would take about 2 years. Therefore, UK government is likely to closely monitor performance before lockdown and the sustainability of the plan for future.

In 2019, the company suffered losses of more than £370mn ($469.3mn). In April 2020, Tata Steel’s UK operations had been facing financial challenges as the COVID-19 outbreak further dampened steel demand. 

The company, then sought £500mn ($634.5mn) funding from the UK and Welsh governments. Of this, the UK government could only offer to pay £50mn to companies with a turnover of more than £45mn under the Coronavirus Large Business Interruption Loan Scheme to help these companies tide over the crisis. 

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