Tata Steel UK to use furlough retention bonus

London — Tata Steel UK, the largest domestic steel producer with the Port Talbot blast furnace site at its heart, has welcomed the government's furloughed retention scheme and confirmed it would use it, according to a company statement sent to S&P Global Platts July 13.

Under the Retention Bonus scheme, companies will receive GBP1,000 for each furloughed worker they bring back -- as long as they are still kept on through to January.

"Our use of the furlough scheme allowed us to retain vital skills and experience within the company to not just keep the business going in these difficult times, but to prepare to serve our customers as they ramp up their operations too," Tata Steel's spokesman told Platts.

Around a third of the 8,000 Tata Steel UK employees were furloughed at one stage or another. Tata steel UK has a designed steelmaking capacity of 5 million mt/year, though it produces around 3.5 million mt/year.

Meanwhile the steel company said it is still in talks with the UK government to obtain a support financial package. Tata Steel UK has asked the UK government for a GBP500 million loan, Platts reported earlier.

Steel producers and re-rollers in UK as well as in the rest of Europe were hit by the coronavirus outbreak due to sluggish demand from the cars and constructions sectors, which are key for the steel industry, leading a number of producers to request financial assistance from the government.

At the beginning of the month, the UK government announced it would provide an emergency loan for steelmaker Celsa, marking the first deal under a state scheme designed to bail out companies seen as strategically important, with Celsa UK's loan package estimated at GBP30 million ($37.39 million).

Tata steel is not the only one to wait for the rescue package approval. British Steel -- recently purchased by China's Jingye Steel Group -- and Liberty Steel Group are also understood to have applied for UK government support. Both the two companies when reached by Platts on July 13 said that there are no news on this matter.

About the furlough retention scheme, British Steel said the scheme is not applicable to them as they do not have any furloughed employees at the moment. 300 British Steel employees were previously furloughed at Skinningrove (June/July) for three weeks but they've since returned to work.

Liberty Steel said that at the moment it still has over 1000 workers furloughed across its UK steel and UK engineering businesses, and at the moment they "haven't decided yet whether to take up the furlough bonus scheme."

About the broader financial package rescue, the UK Department for Business, Energy and Industrial Strategy (BEIS) spokesman did not return Platts email on the subject.