In a shocking twist, the owners of Port Talbot steelworks, Tata Steel, have turned down a trade union proposal aimed at keeping its blast furnaces operational. This decision puts nearly 3,000 jobs at risk, potentially making the UK the sole major economy incapable of producing steel from scratch.

Tata Steel, an Indian-owned company, conveyed to workers’ representatives during a summit at the luxurious St James’ Court hotel in London, owned by the Tata Group, that it can no longer sustain production at the loss-making plant in south Wales. The company, receiving £500 million from the government for a four-year transition plan towards greener production, cited financial constraints.

The shadow business secretary, Jonathan Reynolds, criticised the government for allocating funds to Tata without securing job guarantees, labelling the strategy as “£500m for 3,000 job losses.”

The expected formal announcement of Tata’s plan on Friday outlines the closure of Port Talbot’s blast furnaces while the company constructs electric arc furnaces, a more environmentally friendly and cost-effective steel-making process using recycled scrap.

Although a proposal to keep some of the site’s mills open, saving around 200 jobs, is under consideration, this decision is a significant setback for a town heavily reliant on a single factory for its local economy.

The Community and GMB unions had proposed a staggered transition plan to protect workers immediately, advocating for the blast furnaces to stay open during the transition, with at least one continuing until 2032. However, Tata Steel deemed the proposal unaffordable given Port Talbot’s daily losses of £1 million.

The potential shutdown of the UK’s only other blast furnaces in Scunthorpe, also transitioning to electric arc furnaces, could leave the country as the only G20 nation unable to produce steel from raw materials.

Labour MP Stephen Kinnock urged the government to reconsider its approach and adopt the union’s staggered transition plan, emphasising the deaf ears turned to their proposals during talks.

Closing Port Talbot’s blast furnaces would mark another grim milestone in the industry’s long decline, with production falling from 25 million tonnes in 1971 to 6 million tonnes and employment dropping from 250,000 to just under 34,000.

As the UK steel industry faces a pivotal moment, with the possibility of a renaissance or continued decline, UK Steel previously highlighted 2024 as a crucial crossroads.

While new electric arc furnaces can replicate some higher-quality grades produced by blast furnaces, the more challenging process may result in the UK losing the ability to manufacture certain products, relying on imports instead.

A government spokesperson emphasised their commitment to a sustainable and competitive future for the UK steel sector, citing the £500 million support and a dedicated transition board with £80 million funding from the UK government and £20 million from Tata Steel. The board aims to support affected employees and the local economy, chaired by the Welsh secretary with ministerial representation from the Welsh government.