UK Govt Grants 500 Million Pound For Tata Steel Port Talbot Plant Decarbonisation

Tata Steel and the UK government announced a joint agreement to invest in an Electric Arc Furnace at the Port Talbot site worth 1.25 billion pounds inclusive of a government grant

Tata Steel plant will replace its existing coal-powered blast furnaces, "which is currently the UK’s largest single carbon emitter", with a new Electric Arc Furnace. 

Source : Getty

The UK government and Tata Steel on Friday announced a joint agreement to invest 1.25 billion pounds for the decarbonisation of the country’s largest steel plant in Wales owned by Tata Steel. The government has agreed to grant up to 500 million pounds to Tata Steel to buy a new Electric Arc Furnace and related facilities for greener steel production at Port Talbot in South Wales. 

"Tata Steel and the UK government announce a joint agreement on a proposal to invest in state-of-the-art Electric Arc Furnace steelmaking at the Port Talbot site with a capital cost of £1.25 billion inclusive of a grant from the UK Government of up to £500 million, subject to relevant regulatory approvals, information, and consultation processes, and finalisation of detailed terms & conditions," Tata Steel said in a statement. 

In a press release, the UK Department for Business and Trade (DBT) said the proposal which is subject to information and consultation processes led by Tata Steel is "one of the largest government support packages in history."

With this investment, the Tata Steel plant will replace its existing coal-powered blast furnaces, "which is currently the UK’s largest single carbon emitter", with a new Electric Arc Furnace. 

The department said that it would reduce the UK’s entire carbon emissions by around 1.5 per cent as a result.

The government said that Tata Steel UK employs over 8,000 people, including at Port Talbot, which would otherwise be under serious threat without substantial investment to guarantee its future. Tata Steel also supports around 12,500 further jobs in the upstream supply chain.

It added that the proposal announced today is expected to "safeguard over 5,000 jobs across the UK."

"The UK Government would also ensure a broad range of support for any staff who are affected by the transition, working with the Welsh Government and Tata Steel to establish a dedicated transition board to support both affected employees and the local economy, with up to £100m funding," the government further said. 

UK Govt Hails The Deal

“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.

Prime Minister Rishi Sunak said the investment will "modernise and secure a more sustainable future for the UK steel industry".

This investment will modernise and secure a more sustainable future for the UK steel industry.

It will also protect thousands of skilled jobs in the long-term and help grow the economy 🇬🇧 https://t.co/DjbVLEBStt

— Rishi Sunak (@RishiSunak) September 15, 2023

"It will also protect thousands of skilled jobs in the long-term and help grow the economy," he tweeted.

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 Prime Minister Rishi Sunak in developing the proposed transition pathway for the future for sustainable steelmaking in the UK."

“This proposal is a landmark moment for maintaining ongoing UK steel production - supporting sustainable economic growth, cutting emissions, and creating green jobs. It is right that we are ready to step in to protect this world class manufacturing industry and to support a green growth hub in South Wales,” said UK Chancellor Jeremy Hunt.

Job Concerns Still Remains 

According to a report by The Guardian, Tata Plant at Port Talbot currently employs 4,000 workers. The company had previously said there is a possibility of cutting up to 3,000 jobs at the site, even with government support. Union leaders have expressed frustration at being excluded from discussions between the UK government and Tata Steel, which could result in significant job losses at two of the UK's four remaining blast furnaces.

Port Talbot's steelworks operates two blast furnaces around the clock, supplying steel to various industries. Tata Steel's proposed decarbonisation project aims to enhance the UK's steel security and reduce direct emissions by 50 million tonnes over a decade. The project also involves restructuring Tata Steel's balance sheet, potentially eliminating current UK operation losses and non-cash impairment of legacy investments, as per the reports. 

“Unions should have had a seat at the table throughout this process, as it is clear the interests of the workforce have not been considered in the rush to sign off a deal to do decarbonisation on the cheap," said the Community steelworkers, among those concerned about the arrangements, as per PTI.