Tata Steel deal in sight as future of Port Talbot plant hangs in the balance

The government is in talks with unions about increasing investment in Tata Steel’s smaller factories in Wales, with the future of its flagship Port Talbot plant hanging in the balance.

The Labor Party is working to seal a deal, possibly within weeks, that would allow Tata to stop traditional steel production while protecting as many jobs as possible.

Tata, an Indian multinational group that bought Port Talbot in 2007, plans to close its last furnace, which makes steel using coal and iron, in September.

It will be replaced by an electric oven that uses recycled materials. The Conservative government has approved plans to give Tata £500m for the transition, even though this will put 2,800 jobs at risk.

Tata says this is necessary because it runs Port Talbot at a loss of £1m a day.

Critics have said shutting down the blast furnace makes the UK the only major economy unable to produce steel from scratch and is a threat to national security.

But Tata says its customers are clamoring for green steel and it is already dependent on importing raw materials.

The Labour Party has long criticised these plans but must come to an agreement and take a pragmatic approach to retaining steel production in Wales.

It was previously thought that Labour might urge Tata to keep the furnace open, but Business Secretary Jonathan Reynolds said last week that Tata was “inaccurate” and acknowledged it was unlikely to delay the closure.

Talks with unions, who will need to approve the plans, are considering whether there are other parts of the business where further investment could help secure long-term jobs and push the deal through.

It is not clear whether the government or the company will commit to funding the investment. An industry source said investing in infrastructure at Tata’s Llanwern plant in Newport, which supplies the car industry, could extend the life of the factory.

Other areas of potential investment include a plant that makes canned food at Trostre, near Llanelli. A voluntary redundancy scheme was launched last week.

The unions said they “welcomed” the Government’s decision to make securing the future of Port Talbot and other businesses a priority.

Labour has pledged to spend £2.5bn to support the steel industry’s transition to a greener model, on top of the £500m already agreed with Tata.

Reynolds said: “Steel is vital to a vibrant and secure economy. Our steel sector needs a government that works in partnership with unions and businesses to ensure a transition to green steel that is fit for the workforce and delivers economic growth.”