By Sarah Young and Farouq Suleiman
LONDON (Reuters) -Tata Steel said on Friday it will close its two blast furnaces in Britain by the end of this year, with the loss of up to 2,800 jobs at its Port Talbot steelworks in Wales.
The closures are part of India-owned Tata Steel’s plan to turn around its loss-making UK steelmaking business by switching to lower carbon electric arc furnaces, a proposal backed by 500 million pounds ($634.10 million) of government money.
Tata Steel said about 2,500 roles were likely to go in the next 18 months, with 2,800 jobs affected overall. It will start a consultation process as part of the restructuring and said it would try to maximise voluntary redundancies.
“The course we are putting forward is difficult, but we believe it is the right one,” Tata Steel Chief Executive T V Narendran said. “We must transform at pace to build a sustainable business in the UK for the long-term.”
Tata Steel employs more than 8,000 people in the UK, but the warning that there could be 3,000 redundancies came in September when the government announced its funding package to safeguard 5,000 jobs.
Trade unions Community, Unite and GMB said in a separate statement that they rejected the Tata Steel plan and would consult members on next steps, including industrial action.
The electric arc furnaces are operated by fewer workers compared to the blast furnaces and the confirmation of the job losses is a major blow for the area, where Tata Steel is a major employer.
Tata said it would offer a 130 million pound support package to help affected employees retrain and find new jobs.
The switch to electric steelmaking is expected to cut Britain’s carbon emissions by 1.5% as Port Talbot’s coal-fired plant is the country’s biggest single carbon emitter.
Britain has said its financial support for Tata Steel helped to secure the future of the country’s steel industry, because without it, Tata had threatened to shut the plant entirely, citing losses of 1 million pounds a day.
But critics of the plan say the industry will be severely diminished because electric arc furnaces make steel from recycling scrap steel, rather than making so-called virgin steel from iron ore, coke and other inputs.
China-owned British Steel, which has two blast furnaces in Scunthorpe, northern England, is also in talks with the government about shifting to cleaner manufacturing. Unions have warned of up to 2,000 redundancies.
($1 = 0.7885 pounds)
(Reporting by Sarah Young and Farouq Suleiman, Editing by Kylie MacLellan, Kirsten Donovan)