“We believe that with electric arc furnaces, there is no way they can keep the portfolio they have got,” said Alun Davies, a union official. “It is concerning.”
Operations would be subject to the availability and price of electricity, which tends to be expensive in Britain, and to the fluctuations of the scrap metal market. The union said the steel produced by an electric furnace would not be suitable for some auto components and food and beverage containers, potentially leading to the closure of the plants that produce steel for those products and putting hundreds of jobs at risk.
Tata has been running large losses at its British operations and looking at solutions including mergers and, potentially, plant closings for years. In a recent filing, the company said the British steel unit lost £279 million in the latest financial year.
“It has been an absolute pleasure to work with” the British government, said Natarajan Chandrasekaran, the chairman of Tata Group, the parent company, in a statement.
The announcement is the latest example of the British government being lobbied to put up substantial sums to preserve local jobs. On Monday, the government said it would provide support to help BMW produce electric versions of the popular Mini cars in Britain.
Earlier this year, the government also agreed to provide an undisclosed amount of aid to encourage the Tata Group to invest £4 billion in a factory that would produce batteries likely to be used in electric vehicles made in Britain by Jaguar Land Rover, which the Indian conglomerate owns.