The UK government has unveiled a “historic package” of joint investment with Indian steel giant Tata Steel to secure Britain’s largest steelworks in Wales, with a grant worth up to £500 million.
As part of the agreement, Tata is expected to invest £1.25 billion, including the government grant, in a new Electric Arc Furnace and related facilities for greener steel production at Port Talbot in South Wales, currently the UK’s largest single carbon emitter. The UK’s Department for Business and Trade (DBT) said the proposal, which is subject to information and consultation processes led by Tata Steel, has the potential to safeguard over 5,000 jobs across Britain and several more in the supply chain.
UK Business and Trade Secretary Kemi Badenoch said: “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.
“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.”
Tata Steel UK employs over 8,000 people, including at Port Talbot, which was under serious threat without substantial investment. The company also supports around 12,500 further jobs in the upstream supply chain.
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 Rishi Sunak in developing the proposed transition pathway for the future for 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.”
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The new electric furnace is to replace the existing coal-powered blast furnaces, which are nearing the end of their effective life, and reduce the UK’s entire carbon emissions by around 1.5 per cent as a result. An Electric Arc Furnace uses an electric current to melt scrap steel or iron and produce steel, whereas blast furnaces use coke, a carbon-intensive fuel made from coal to produce steel.
“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.
The transition to sustainable steelmaking at Port Talbot is also expected to reduce the UK’s entire business and industry carbon emissions by 7 per cent, Wales’ overall emissions by 22 per cent and the Port Talbot site’s emissions by 85 per cent.
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While there are concerns over job losses, the UK government has said it 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.