Tata Steel receives 500 mn pounds grant from U.K. for Port Talbot

Tata Steel and the United Kingdom on Friday announced a joint agreement on a proposal to invest in Electric Arc Furnace steelmaking at the Port Talbot site with a capital cost of 1.25 billion pounds. This includes a grant from the U.K. government of up to 500 million pounds.

The project would bolster Britain’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, the company says in a statement.

With a high degree of circularity, it would leverage strategic, domestically available scrap steel and promote local value addition within the U.K., it says.

“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,” the statement says.

The proposed project would 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 Tata group company says.

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.

“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,” says Tata Steel’s chief executive officer and managing director T V Narendran.

Commenting on the announcement, Tata Group chairman N Chandrasekaran says: “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,” says Chandrasekaran.

The company today also announced its intention to invest approximately 20 million pounds over 4 years to set up two additional Centres of Innovation & 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 & Manufacturing).