With a high degree of circularity, it would leverage strategic, domestically available scrap steel and promote local value addition within the UK, the company said.
The UK government has announced a $621 million support package for Tata Steel on a proposal to invest in state-of-the-art Electric Arc Furnace steelmaking at the Port Talbot site in South Wales with a capital cost of £1.25 billion inclusive of the grant. Under the agreement, the British government will provide a state aid package to help switch Port Talbot’s two coal-powered blast furnaces to greener electric arc versions that can run on zero-carbon electricity.
In a regulatory filing on Friday, Tata Steel said the project would bolster UK’s steel security and would be the first major step towards decarbonisation of the local steel industry, which would reduce 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 company said.
The company said the proposed project would ensure continuity of steelmaking 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.
It further added its subsidiary 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.
Last year, Tata reportedly warned that its UK operations were under threat unless it secured government funding to help it move to less carbon-intensive electric arc furnaces.
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 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 UK. 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.”
Tata Steel CEO and Managing Director, T V Narendran said: “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 risks 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.”
Reuters reported that the deal could result in as many as 3,000 job losses. The government said in its statement that the grant, which it called one of the largest government support packages in history, would help safeguard 5,000 jobs.
Tata Steel currently employs over 8,000 people, raising the prospect that there will be as many as 3,000 redundancies as the lower-carbon electric furnaces are less labour intensive.
The shares of Tata Steel on Friday closed at Rs 132.05, up by 0.30 per cent. On Thursday, it is one of the top gainers with 1.66 per cent gains.
