Tata Steel (Europe) is temporarily to mothball the hot strip mill at its Llanwern site in Newport, South Wales.

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, which has lower costs. The Llanwern cold rolling mill and ‘Zodiac’ galvanising line will continue to operate.

The Llanwern site will see a reduction of some 115 jobs carried out by fixed-term contract employees, agency workers and contractors.

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.

Jon Ferriman, Hub Director for the Strip Products UK hub based at Port Talbot and Llanwern commented “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.