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Tata Steel to close South Wales plant, with 380 jobs at risk

Edmund Heaphy
·Finance and news reporter
NEWPORT, UNITED KINGDOM - MAY 22: A Tata Steel steelworks sign seen at Tata Steel's Llanwern steelworks on May 22, 2016 in Newport, United Kingdom. (Photo by Matthew Horwood/Getty Images)
A sign seen at Tata Steel's plant in Newport. Photo: Matthew Horwood/Getty Images

Tata Steel said on Monday that it is proposing to close its Orb Electrical Steels plant in Newport in South Wales, with the potential loss of up to 380 jobs.

A further 26 jobs could go at the company’s Wolverhampton Engineering Steels Service Centre, which is also likely to close.

The company said in a statement that it was “unable to find a way forward” for the Newport plant, which makes transformers and generators used in electricity production.

In a statement, Henrik Adam, CEO of Tata Steel’s European operations, said that the proposal will be “sad news” for workers.

“This is necessary, enabling us to focus our resources, including investment, on our core business and markets, helping us build a long-term sustainable future in Europe,” he said.

The company said that the Orb Electrical Steels business has been “loss-making for several years,” noting that it “struggled to compete in the fast-moving market to supply steels used in electricity transformers.”

READ MORE: British Steel workers hope jobs safe as buyer found in rescue deal

It said it was not feasible to refactor the facility, noting that it would cost more than £50m ($59.9m) to convert the plant into one that creates steel for electric vehicle production.

Commenting on the closures, shadow business secretary Rebecca Long Bailey said it was “yet another blow” to the UK steel industry.

“This government’s reckless no-deal policy is hammering manufacturing before Brexit has even happened,” said Bailey, a Labour MP.

Tata’s Adam said: “Continuing to fund substantial losses at Orb Electrical Steels is not sustainable at a time when the European steel industry is facing considerable challenges. We saw no prospects of returning the Orb business to profitability in the coming years.”

Tata Steel said it would make “every effort” to reduce the impact these moves will have on employees, including offering alternative employment opportunities within the company.

READ MORE: UK manufacturing hits seven-year low on Brexit and global slowdown fears

Consultations with trade unions will begin shortly, it said.

The news comes at a challenging time for the wider British steel industry, which is struggling with US tariffs on EU steel, Chinese competition, high energy bills, and the decline of sterling since the Brexit referendum.

British Steel, which was sold by Tata for £1 in 2016, collapsed into administration in May, putting thousands of workers' livelihoods at risk in Scunthorpe, Teesside, and other parts of the UK.

But the first stages of a rescue deal were agreed last month as the Turkish military pension fund stepped in, with hopes it will save jobs after offering to buy the whole company.

Tom Belger contributed reporting.