Tata Steel is temporarily to mothball the hot strip mill at its Llanwern site in Newport, South Wales, with immediate effect.
The facility is expected to remain mothballed until the UK economy and steel demand justify a restart. In the meantime the market will be supplied with material from Tata Steel’s other hot strip mill in South Wales at Port Talbot, whose costs are lower. The Llanwern cold rolling mill and ‘ZODIAC’ galvanising line will continue in operation.
However, the site will see a reduction of some 115 roles carried out by fixed-term contract employees, agency workers and contractors.
Jon Ferriman, Hub Director for the Strip Products UK hub based at Port Talbot and Llanwern, said: “It is with great regret that we have had to make this decision. I would like to pay tribute to those valuable people who have helped us make the flexible working model a success at Llanwern. Clearly this is a very difficult time for them. The Llanwern Hot Rolling Mill is an important operation for us, and 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.
During the financial crisis in 2009 the Llanwern hot strip 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.
Mr Ferriman continued: “We remain 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 further improve our competitiveness for the future. At the same time we are placing a strong emphasis 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.
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About Tata Steel in Europe
The European operations of Tata Steel (formerly known as Corus) comprise Europe's second largest steel producer. With main steelmaking operations in the UK and the Netherlands, they supply steel and related services to the construction, automotive, packaging, material handling and other demanding markets worldwide. Tata Steel is one of the world’s top ten steel producers. The combined group has an aggregate crude steel capacity of more than 28 million tonnes and approximately 80,000 employees across four continents.