Tata Steel to get £500 mn from UK govt for Port Talbot – ET Infra


Tata Steel

Tata Steel and the UK government have signed joint agreement on a proposal to invest in Electric Arc Furnace steelmaking at the Port Talbot site costing £1.25 billion, with the government granting up to £500 million, the company said in a stock exchange filing.

The company said that it would reduce direct emissions by 50 million tonnes over a decade.

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

About 8,000 people are employed by Tata Steel in Britain and Sky News cited industry sources as saying the company had warned that it may need to make as many as 3,000 redundancies in the future.

“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. We look forward to working with our stakeholders on these proposals in a responsible manner,” said Tata Group Chairman, N Chandrasekaran.

Tata Steel’s Chief Executive Officer and Managing Director, T V Narendran also said that with the support of the UK Government Tata Steel UK into a green, modern future ready business.

“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,” he added.

The company also informed that its UK arm 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.

Many of the existing ‘heavy end’ assets at this facility—such as blast furnaces and coke ovens—are reaching the end of their operational life, it said.

The Department for Business and Trade (DBT) said the proposal, which is subject to information and consultation processes led by Tata Steel, has the potential to safeguard over 5,000 jobs across Britain.

“The UK government is backing our steel sector, and this proposal will secure a sustainable future for Welsh steel and is expected to save thousands of jobs in the long term,” said UK Business and Trade Secretary Kemi Badenoch.

“This is an historic package of support from the UK government and will not only protect skilled jobs in Wales but also grow the UK economy, boost growth and help ensure a successful UK steel industry,” she said.

Tata Steel UK will now inform and consult with staff and unions on the agreed proposals, with unions fearing thousands of job losses.

The British Prime Minister had previously assured Tata group that the government will sweeten its earlier subsidy offer to modernise and decarbonise the company’s Port Talbot plant.

It was globally reported in January that Tata Steel, which owns the UK’s largest steelworks at Port Talbot, will receive around 300 million to make electric arc furnaces at its UK operations. While Tata Steel has not confirmed the sum, it had stated that the amount promised is too little.

Tata Steel has maintained that the Port Talbot plant doesn’t generate enough profit to justify fresh investments for replacing its two blast furnaces, which are nearing the end of their operational life. The high-emission blast furnaces are proposed to be replaced by less carbon-intensive electric arc furnaces in line with the UK’s decarbonisation goals. The island nation has pledged to achieve net zero greenhouse gas emissions by 2050.

Tata Steel has in the past warned that without government support, it will need to consider closing its sites.

  • Published On Sep 15, 2023 at 05:08 PM IST

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