Tata Steel has affirmed its commitment to move forward with its Great British Pound (GBP) 1.25 billion investment to construct a cutting-edge Electric Arc Furnace for steel production in Port Talbot, in collaboration with the UK government. This decision comes after Tata Steel announced the closure of two blast furnaces in January, posing significant challenges for Port Talbot and the local unions.
The proposed investment aims to replace the two blast furnaces with electric arc furnaces, marking a significant transformation for Britain’s largest steel plant. Tata Steel plans to initiate orders for the furnace equipment by September and commence construction by August 2025.
In a statement released on Thursday, Tata Steel emphasized the importance of the investment in preserving 5,000 jobs and ensuring future supplies to customers. The decision to proceed with the investment follows extensive consultations with the UK Steel Committee and its advisers over the past seven months.
Tata Steel CEO TV Narendran underscored the viability of the proposed restructuring and transition, stating, “This is the most viable proposal, in contrast to the unions’ unaffordable plan, which has high inherent operational and safety risk.” He highlighted the company’s commitment to work collaboratively with trade unions to reach an agreement on the future of the UK business and its impact on employees.
The shift to new furnaces is expected to reduce UK emissions by approximately 2%, particularly if renewable electricity is utilized. The project will be supported by approximately £500 million in subsidies offered by the Rishi Sunak-led government.
Rajesh Nair, CEO of Tata Steel UK, emphasized the challenges posed by the unions’ plan, which could lead to significant financial, operational, and safety hurdles, delaying the transition to green steel by two years.
Tata Steel, the UK’s largest steel producer, employs around 8,000 staff in the UK, with a significant portion based at Port Talbot. In the fiscal year 2024, Tata Steel UK recorded a negative EBITDA of 373 million pounds and a negative free cash flow of 623 million pounds.
The decision to proceed with the investment underscores Tata Steel’s commitment to sustainable growth and underscores its pivotal role in the UK’s steel industry.