MSs grilled representatives of Tata Steel about plans to cut up to 2,800 jobs in Port Talbot.
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.
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 £160m and in the first nine months of this financial year it’s about £330m….
“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 £200m 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.”
Pressed on whether the UK Government sought to attach any conditions to the current deal, Mr Nair would not be drawn on details still subject to negotiation.
However, he said the £1.25bn deal is for building the EAF and reducing carbon dioxide, adding that UK ministers have been clear that they will not fund losses.
Mr Nair added that the UK Government’s £500m contribution will be milestone-based.
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.
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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 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.”
‘Difficult time’
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 £1.25bn 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.
In an earlier evidence session on February 7, Vaughan Gething stressed that any alternative plans for the future of steelmaking in Port Talbot will require more capital investment.
The economy minister pointed out that Tata Steel has described the Syndex plan as credible but unaffordable, adding that the financial firepower can only come from Westminster.
Mr Gething said a £100m transition fund – with £80m from the UK Government and £20m from Tata Steel – is unlikely to cope with the scale of job losses over 18 months.
The would-be first minister estimated the total number of at-risk jobs at more than 10,000, including supply chains and contractors in the wider economy.
He criticised engagement from the UK Government, saying he has not met Kemi Badenoch since she was appointed UK business and trade secretary a year ago.
“It’s not been a great exercise in inter-governmental relations,” he told the committee.
Mr Gething, who has met the company 16 times in two years, said he has made the point to Tata Steel that it is an election year and it should not make any irreversible choices.
