UK government on Friday announced a joint agreement with Tata Steel on a proposal to invest in the manufacturing plant at the Port Talbot site which includes a grant from the UK government of up to £500 million. The total capital cost of the steel making plant is £1.25 billion. This effective investment will result in the transition from coal- powered blast furnaces to state-of-the-art Electric Arc Furnace steel making at the Welsh plant.
The proposed investment is anticipated to reduce carbon emissions at the Port Talbot plant by about 5 million tonne annually. “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”, said T V Narendran, CEO and MD, Tata Steel. The unions would be meaningfully consulted about the planned transition pathway in considering future risks and opportunities for Tata Steel UK, he continued.
Additionally, the planned project is expected to entail restructuring of Tata Steel’s balance sheet, potentially eliminating the ongoing cash losses in the UK business and the non-cash impairment of legacy investments. The Company also revealed its plans to establish two more Centres of Innovation & Technology in the UK at the Henry Royce Institute in Manchester (for advanced materials research) and Imperial College London (for research in Sustainable Design & Manufacturing) for an estimated £20 million over four years. The proposal is said to be the largest investment in the UK steel industry for decades.