Tata Steel is reportedly in advanced discussions with the UK government over a £500 million financial package aimed at securing its long-term presence in the country. Alongside this, Tata Group, the Indian parent company, is expected to contribute £700 million to the effort, according to reports from Sky News.
As part of this proposed deal, Tata Steel would be required to invest in electric arc furnaces to reduce carbon emissions. This shift in production, while more environmentally friendly, could result in the loss of several jobs compared to the current blast furnace method.
Government officials have been in talks with Tata Steel and British Steel for several months, offering each company £300 million to transition away from coal, with the condition that they protect jobs for a decade.
Though no final agreements have been reached, insiders suggest that a deal with Tata Steel could be finalised soon. However, up to 3,000 UK-based Tata employees could potentially lose their jobs in the long run due to decarbonization efforts, with some job cuts potentially occurring through voluntary early retirement programs.
The timing and details of these workforce reductions would be subject to negotiations between Tata and labour unions. In July of the previous year, Tata Group’s Chairman, Natarajan Chandrasekaran, stressed the need for government financial support to transition to a more sustainable steel production plant, warning that without assistance, plant closures might be inevitable.
Tata Group had requested £1.5 billion in government subsidies for greener production methods. Insiders indicate that the company, with approximately 8,000 UK employees, has been pushing for an increase in the proposed financial package in recent weeks.
Rishi Sunak’s visit to India for the G20 summit in New Delhi next week may hold significance in these negotiations. The UK government had committed to providing up to £500 million in subsidies for Tata Group’s £4 billion plan to establish an electric car battery gigafactory in Somerset, potentially creating 4,000 new jobs.