Tata Steel and UK government agree on proposal for UK steel industry investment

Tata Steel and the UK government have jointly agreed on a proposal for the largest investment in the UK steel industry for decades. The proposal lays the decarbonisation pathway towards globally competitive and sustainable steel making in Port Talbot, UK.

Commenting on the announcement, 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 the His Majesty’s Government and the Prime Minister Rt Hon 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’s chief executive officer 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 risk 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.”

Key points:

  1. 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 the finalisation of detailed terms and conditions.
  2. The project would bolster the UK’s steel security and would be the first major step towards decarbonisation of the country’s steel industry, reducing 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.
  3. The proposed project would ensure continuity of steel making 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.
  4. 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.
  5. The proposed project would also 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.
  6. During the transition period and project phase, Tata Steel UK would work intensively to ensure uninterrupted and reliable supply of products to fulfil customer and market commitments, including through the import of additional steel substrate from stable supply chains to feed its downstream units.
  7. Further to the investment proposal, as part of Tata Steel’s commitment to advance global research and innovation in materials science for a sustainable future, the company also announced its intention to invest approximately £20 million over four years to set up two additional Centres of Innovation and 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 and manufacturing).

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