Tata Steel and the U.K. Government have announced an agreement to invest in Electric Arc Furnace steelmaking at the Port Talbot site with a capital cost of £1.25 billion, inclusive of a grant from the U.K. Government of up to £500 million, subject to conditions.
“The project would bolster U.K.’s steel security and would be the first major step towards decarbonisation of the local steel industry, reducing direct emissions by 50 million tonnes over a decade,” Tata Steel said in a statement. “With a high degree of circularity, it would leverage strategic, domestically available scrap steel and promote local value addition within the UK,” it added.
The proposed project would ensure continuity of steelmaking in Port Talbot after the transition, and transform Tata Steel U.K. into a sustainable, capital-efficient and profitable business. With the U.K. Government’s support, the project has a robust investment case, it said.
Tata Steel U.K. will soon commence consultation on the proposal and the transition period including potential deep restructuring for the carbon-intensive, unsustainable iron and steelmaking facilities at Port Talbot, where many of the existing ‘heavy end’ assets —such as blast furnaces and coke ovens—are reaching the end of their operational life, the company added.
The proposed project would also involve Tata Steel’s balance sheet being restructured with potential elimination of the current cash losses in the U.K. operations and non-cash impairment of legacy investments.
During the transition period and project phase, Tata Steel U.K. would work intensively to ensure uninterrupted and reliable supply of products to fulfill customer and market commitments including through import of additional steel substrate from stable supply chains to feed its downstream units, the company said.
Tata Group Chairman N. Chandrasekaran in a statement said, “The agreement with the U.K. Government is a defining moment for the future of the steel Industry and indeed the industrial value chain in the U.K. It has been an absolute pleasure to work with His Majesty’s Government and the Honourable Prime Minister Rishi Sunak in developing the proposed transition pathway for the future of sustainable steelmaking in the U.K.”
“The proposed investment will preserve significant employment and presents a great opportunity for the development of a green technology-based industrial ecosystem in South Wales,” he said.
T.V. Narendran, CEO & MD, Tata Steel said, “Tata Steel U.K. has been facing significant challenges due to the heavy end facilities approaching their end of life. The proposed project with one of the largest investments in the U.K. Steel Industry in recent decades, provides an opportunity for an optimal outcome for all stakeholders.”
“We will undertake a meaningful consultation with the unions on the proposed transition pathway in the context of future risk and opportunities for Tata Steel U.K. With the support of the U.K. Government and dedicated efforts of the employees of Tata Steel U.K. along with all stakeholders, we will work to transform Tata Steel U.K. into a green, modern future-ready business,” he added.
Published - September 15, 2023 08:08 pm IST
