REPRESENTATIVES of Tata steel faced a grilling by MSs over plans to cut up to 2,800 jobs.
Paul Davies, who chairs the Senedd’s economy committee, asked whether the decision to close the two blast furnaces and build an electric arc furnace is purely a financial one.
Along with the jobs at Port Talbot, around 300 jobs at the company’s Llawern plant could also go.
Rajesh Nair, chief executive of Tata Steel UK, said finances have played an important part but the decision is not purely monetary.
He told the committee the company’s assets in Port Talbot are reaching their end of life, compromising reliability, safety and timeliness of delivery.
Mr Nair, who has worked for the company for 25 years, said the business has been losing a tremendous amount of money over the past few years.
He said: “Just for the last quarter, the business turned a loss of about £160 million and in the first nine months of this financial year it’s about £330 million.
“We are likely to turn up with a loss of nearly half a billion in just one year – this is just not sustainable nor viable for any company to handle.”
Mr Nair suggested the multi-union Syndex plan, which involves keeping at least one of the blast furnaces, would add nearly £200 million to the cost and delay the electric arc furnace (EAF).
“We will not be in a position to build the EAF in an existing steel shop,” he said. “And if you don’t have a steel shop operating, there is no way the blast furnaces can be kept going.”
Asked if Tata would look at alternatives if the UK Government offered more money, Mr Nair said the company would be more than happy to examine additional investments.
He told committee members: “On the other side of the transformation, we will have a viable business – which the UK steel business has not been for the past 15 years.”
Hefin David pointed out that a General Election is on the horizon – and an incoming Labour UK Government could offer a significantly different package of support.
The Labour MS, who represents Caerphilly, asked whether Tata would consider delaying decisions on the second blast furnace until after the state of political flux is resolved.
Mr Nair stressed that there is an imperative to “get going” with the EAF, saying the company has had conversations with UK Labour leader Keir Sir Starmer.
He told the committee: “Managing the business in the existing set up is going to be a huge burden on the company and on the shareholders.
“I don’t think any government, Dr David, with due respect, would be willing to fund losses.”
Vikki Howells, the Labour MS for Cynon Valley, asked how the company has sought to minimise potential job losses and the wider impact on Port Talbot.
Mr Nair told committee members that the company has carefully considered the impact – not only on staff, but also on contractors and the community.
He added that a large part of the £1.25 billion investment will go into the Port Talbot ecosystem.
Chris Jaques – Tata Steel UK’s chief HR officer – recognised it is a difficult time, saying a transition board has been set up to look at short-term support and long-term regeneration.
He told Ms Howells that the business decided to continue operating the hot strip mill in Port Talbot following talks with trade unions, securing 200 jobs.
Mr Jaques said the statutory consultation, which began on February 2, will be for a minimum of 45 days and the company will seek to maximise the number of voluntary redundancies.