Tata Steel and UK Government to invest in electric arc furnace production at Port Talbot

Tata Steel and the UK Government have announced a joint agreement on a proposal to invest in state-of-the-art electric arc furnace steelmaking at the Port Talbot site in Wales with a capital cost of £1.25 billion inclusive of a grant from the UK Government of up to £500 million.

It's hoped the project will bolster the UK’s steel security and will be the first major step towards decarbonisation of the country’s steel industry, reducing direct emissions by 50 million tonnes over a decade. With a high degree of circularity, it would leverage strategic, domestically available scrap steel and promote local value addition within the UK.

The proposed project would ensure continuity of steel making in Port Talbot after the transition, and transform Tata Steel UK into a sustainable, capital-efficient and profitable business. With UK Government support, the project has a robust investment case.

Tata Steel UK 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 proposed project would also involve Tata Steel’s balance sheet being restructured with potential elimination of the current cash losses in the UK operations and non-cash impairment of legacy investments.

The company also announced its intention to invest approximately £20 million over four years to set up two additional Centres of Innovation and Technology in the UK at the Henry Royce Institute at Manchester (for advanced materials research) and at Imperial College London (for research in sustainable design and manufacturing).

Tata Group chairman N Chandrasekaran said: “The agreement with the UK Government is a defining moment for the future of the steel industry and indeed the industrial value chain in the UK. It will preserve significant employment and presents a great opportunity for the development of a green technology-based industrial ecosystem in South Wales.”  

Tata Steel’s CEO and managing director, T V Narendran added: “Tata Steel UK 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 UK 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 UK. With the support of the UK Government and dedicated efforts of the employees of Tata Steel UK along with all stakeholders, we will work to transform Tata Steel UK into a green, modern future ready business.”

However, it is anticipated that the restructuring and new investment will lead to significant job losses at the plant, with unions reacting angrily to the announcement.

Gary Smith, GMB general secretary, commented: “The jobs of thousands of steelworkers are now at risk. The cost to local people and the wider Port Talbot community will be immense. Once again, we have the spectacle of leaders talking up the fantasy land of a ‘just transition’ while the bitter reality for workers is them getting the sack.”

Tata Steel UK

www.tatasteeleurope.com