Tata Steel Ltd has agreed to invest £1.25 billion ($1.55 billion), which includes an up to £500 million ($620 million) UK government grant, to boost greener steelmaking initiatives at Port Talbot in Wales.
The deal, which includes one of the largest UK government support packages in history, aims to modernize production of greener steel and protect skilled jobs, subject to consultation and regulatory approvals, a release said.
Shares of Tata Steel rose in early Monday morning trading on the news before falling 0.87% on BSE to ₹130.80 by 2.25pm, in line with a decline in the broader markets.
Tata plans to replace the existing coal-powered blast furnaces, which are nearing the end of their effective life, with a new electric arc furnace for greener steel production at Port Talbot.
“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,” chancellor of the exchequer Jeremy Hunt said.
“The landmark proposal announced today builds on other major investments in UK green technology by Tata group, including the July announcement of a £4 billion battery gigafactory creating 4,000 direct jobs, and represents a major vote of confidence in the UK,” Hunt added.
Steel production at Port Talbot is currently the UK’s largest single carbon emitter, and shifting to greener manufacturing processes is expected to reduce the UK’s entire carbon emissions by around 1.5%, the release said.
“The UK government is backing our steel sector, and this proposal will secure a sustainable future for Welsh steel. 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,” UK business and trade secretary Kemi Badenoch said.
Tata Steel UK employs more than 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, but unions have said that the deal will have “devastating consequences”, with as many as 3,000 workers expected to lose their jobs, The Guardian reported.
The country’s largest steel producer had warned that it faced site closures if a financial aid could not be agreed, the report said.
“Steelmaking remains a vital part of the Welsh economy and this huge support package from the UK Government ensures that the industry now has a bright future to match its long and proud history in South Wales. We are investing in our steel industry as it makes the necessary transition to greener methods of production and are also putting support in place for the local workers affected by the changes,” Welsh secretary David T.C. Davies said.
The UK government press release said that the deal has the potential to safeguard over 5,000 jobs across the UK.
“The agreement with the UK government is a defining moment for the future of the steel industry and the industrial value chain 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,” Tata group chairman N. Chandrasekaran said.
The transition to sustainable steelmaking at Port Talbot is also expected to reduce the UK’s entire business and industry carbon emissions by 7%, Wales’s overall emissions by 22% and the Port Talbot site’s emissions by 85%, the release added.
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