For now, Tata Steel mothballs South Wales unit

Tata Steel is temporarily mothballing its hot-strip mill at Newport in South Wales with immediate effect, the Mumbai-headquartered company said on Friday.

In a statement issued, the steel maker said the facility at Llanwern was expected to remain shelved until the UK economy and steel demand justify a restart. The site will see a reduction of some 115 roles carried out by fixed-term contract employees, agency workers and contractors.

In the meantime, the market will be supplied with material from Tata Steel’s other hot-strip mill in South Wales— at Port Talbot, where the costs are lower. The Llanwern cold rolling mill and ‘Zodiac’ galvanising line will continue in operation.

Jon Ferriman, Hub Director for the Strip Products UK hub based at Port Talbot and Llanwern, said this was a “very difficult” time for the workers. “The Llanwern Hot Rolling Mill is an important operation for us,” he said. “Our intention is to bring it back into operation as soon as market conditions permit.”

The mothballing is a result of continuing poor UK steel demand amid a deteriorating European economic outlook. It is not connected to the effects on primary steelmaking of UK or EU environmental legislation, the company said.

Earlier, during the financial crisis in 2009, the Llanwern mill was mothballed for nine months — between January and September — also as a result of poor market conditions. Llanwern’s flexible working model was designed during that period.

Ferriman said the company remained committed to sustainable steelmaking in Wales. “Our major capital expenditure project to rebuild Port Talbot’s Blast Furnace No 4 is now underway and we are working on a raft of investment initiatives to improve our competitiveness. At the same time, we are emphasising on cost-saving measures as we weather the current economic downturn.”

A 30-day consultation process will take place with the fixed-term contract staff, agency workers and contractors affected by this announcement and with their representatives.

The GMB union said the announcement again demonstrates the kind of “roller-coaster” ride the steel industry is facing in on Friday’s economy. “This decision is a devastating blow for the UK Steel industry, the economy and the local community of Newport and the supply chain in the surrounding area, especially at this time of the year,” said Keith Hazlewood, the union’s national secretary.

“GMB, along with the other steel unions, will work with the company to mitigate any compulsory job losses.”