Tata Steel Ltd has signed a £500 million grant funding agreement with the UK government for its £1.25 billion green steel project in Port Talbot.
This will allow Tata Steel to proceed at pace with the project to install an electric arc furnace at the steelworks in Wales. The new assets will reduce the UK’s entire industrial carbon emissions by 8% and Port Talbot’s by 90%, setting a benchmark in circularity using scrap.
“With the UK government’s critical support, this complex and ambitious transformation of Port Talbot has the potential to make the plant one of Europe’s premier centres for green steelmaking,” T.V. Narendran, Tata Steel’s chief executive officer and managing director, said in a statement on Wednesday.
The Indian steel major has already launched a public consultation on specific activities and is working closely with the authorities to apply for planning approvals by November, and commence large-scale site work around July.
The electric arc furnace is expected to be operational within three years. These will replace coal-powered blast furnaces, which are nearing the end of their effective life. An electric arc furnace uses an electric current to melt scrap steel or iron to produce steel, whereas blast furnaces use coke, a carbon-intensive fuel made from coal.
Jobs at stake
Alongside its planned £750 million investment, Tata Steel has deployed its global engineering and project capabilities behind this project, which will benefit from an additional £500 million in UK Government Grant Funding, the company said in its statement.
“We now look forward to the efficient and speedy execution of the EAF project. We will also continue our work with the Transition Board and the UK and Welsh governments to enable this project to be a catalyst for economic regeneration and job creation in South Wales,” Narendran added.
In April, Tata Steel had said that it would proceed with a plan to build an electric arc furnace at Port Talbot and start closing the existing heavy-end assets.
Following this, the country underwent months of national-level discussions with UK trade unions that threatened industrial action over expected job losses.
Tata Steel said it had finalised a memorandum of understanding with the UK Steel Committee.
“The company will offer generous support packages to employees leaving the company, and a comprehensive voluntary redundancy aspiration process combined with cross-matching and re-skilling,” the company said.
“For any employee in Port Talbot selected as being at risk of compulsory redundancy, the company will provide the option for them to participate in a paid re-training scheme for a defined period to help them secure alternative future employment.”
Tata Steel ended Wednesday trading on NSE slightly lower at ₹148.38 per share, while the benchmark Nifty 50 index shed 122.65 points to end at 24,918.45.