Tata Steel will temporarily mothball one of its British hot strip mills with immediate effect, as a result of weak steel demand in Britain and the bleak economic outlook for Europe.
The mill at Tata Steel's Llanwern site in Newport, South Wales, would remain mothballed until there was an improvement in the British economy and steel demand, the company said on Friday. The decision bore no connection to the impact of any British or EU environmental legislation, the company, added.
Last month, Tata Steel announced it would be closing its Construction Products division, also at Llanwern, as a result of a sharp fall in British construction activity.
Job losses
The latest decision was expected to result in the loss of around 115 positions, including fixed-term contract employees, agency workers and contractors. The company currently has around 1,400 permanent employees at the site in Newport – those numbers won't change as a result of the mothballing.
The market would be supplied with hot strip mill from Tata Steel's Port Talbot site, where costs were lower, the company said. The other divisions at Llanwern – a cold rolling mill and a Zodiac galvanising line – would continue to operate as usual.
“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,” said Mr Jon Ferriman, Tata Steel's hub director for Strip Products at Llanwern and Port Talbot. “We remain committed to sustainable steelmaking in Wales. At the same time we are placing a strong emphasis on cost-saving measures as we weather the current economic downturn.”
Flexible model
A flexible working model – enabling it to raise or lower its production according to demand – was introduced at the Llanwern hot strip mill in 2009, after it had been mothballed for a period of nine months, also as a result of tough market conditions.