Port Talbot: Government braced for “difficult” talks with Tata Steel

By Huw ThomasBusiness Correspondent, BBC Wales

PA Media Jonathan Reynolds and Welsh first minister Vaughan Gething outisde Tata SteelPA Media

Jonathan Reynolds, who visited Port Talbot with First Minister Vaughan Gething during the election campaign, said a “better deal” was available

New negotiations with Tata Steel over its restructure will be “difficult”, the business secretary has said.

But Jonathan Reynolds said the UK government has “got to try” to change plans which will cost 2,800 jobs.

The company will close the second of its Port Talbot blast furnaces in September, citing losses of £1m a day.

Mr Reynolds is meeting unions on Wednesday to discuss efforts to reach a “better deal” with the company.

The previous government had pledged £500m to Tata Steel towards the cost of a new £1.25bn electric arc furnace which will melt scrap steel, but which requires far fewer workers than the traditional blast furnaces.

The company closed the first of two blast furnaces on 5 July, and plans to shut the second in September. Construction of the new furnace is scheduled to begin in August 2025.

“There is a lot more that this deal could do,” Mr Reynolds told BBC Radio Wales Breakfast.

“I know it’s going to be difficult, but I think I’ve got to try.”

Construction Photography/Avalon A steelworker testing molten iron quality at Blast Furnace 4 in Port TalbotConstruction Photography/Avalon

The first of Port Talbot’s two blast furnaces closed on 4 July 2024

Delaying the proposed closure date of the second blast furnace was something he had already raised with Tata Steel, Mr Reynolds said, but he accepted that Tata’s position had been “very unmovable” on that.

He said the talks were about “more than just the future of that last remaining blast furnace” in Port Talbot.

“There are questions as to how quickly the transition happens, and the scale and size of the new furnaces that might be put in place,” he said.

Mr Reynolds added that the government is implementing policies which will allow greater public investment in the steel industry and will improve the trading environment for businesses.

“That’s everything from how our trade system works, to the energy prices big industrial producers pay,” he said.

Tata Steel had said it would press ahead with its original restructuring plans, regardless of who won the general election.

It has reiterated that position since Labour came to power, with its UK chief executive Rajesh Nair saying he would “be engaging with new ministers” over its “ambitious plans to invest in and transform Port Talbot” and with “supporting our workers through this necessary but difficult transition”.

PA Media Tata Steel worker uniformPA Media

Industrial action has been paused while unions return to negotiations with Tata Steel

Community, the largest union representing steelworkers, has warned that the new government was “up against it” and had four to six weeks to change Tata’s plans.

Another union, Unite, called off strike action to return to discussions over the restructure. Redundancy packages have mostly been agreed, and those talks will now focus on future investment plans by Tata Steel.

Proposals about future investment include discussions about a steel plate mill being built in Port Talbot, which could supply the materials to build wind turbines.

The Labour government had campaigned on the promise of a £2.5bn fund for the future of the steel industry, and has committed to continuing the previous government’s plans to provide £500m towards the cost of the new electric furnace in Port Talbot.

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