Tata Steel, UK government agree to fund EAF conversion

The government of the United Kingdom has reached an agreement to help fund a blast furnace/basic oxygen furnace (BOF) to electric arc furnace (EAF) mill conversion project at the Tata Steel facility in Port Talbot, Wales.

The U.K. government says the agreement with Mumbai-based Tata Steel will see some $1.55 billion invested at the site, including a U.K. government grant worth up to $620 million. The government says the EAF conversion project is receiving “one of the largest government support packages in history.”

That spending will yield greener steel production at Port Talbot, which the government says currently is the U.K.’s largest single carbon emitter.

One green aspect, involves the idling of Port Talbot’s coal-powered blast furnaces. Another would entail the EAF mill’s use of larger amounts of domestically generated ferrous scrap, much of which is exported from the U.K. currently.

“With a high degree of circularity, [an EAF mill in Port Talbot] would leverage strategic, domestically available scrap steel and promote local value addition within the U.K.,” Tata Steel CEO and Managing Director T.V. Narendran says.

The U.K. government estimates the conversion project will reduce the U.K.’s entire carbon emissions by around 1.5 percent annually. Narendran says the conversion will entail reducing direct emissions by 50 million metric tons over a decade.

The joint funding agreement joins several others in Europe and one in Canada that have involved national governments citing decarbonization as a factor to help fund a BOF to EAF conversion project.

Tata Steel currently employs more than 8,000 people in the U.K., including at Port Talbot. A less labor-intensive EAF mill, however, means that total payroll figure could fall to about 5,000 after completion of the conversion.

The government, however, says most of the overall 8,000 jobs—plus another 12,500 jobs in Tata Steel’s upstream supply chain—would be “under serious threat” without the EAF investment.

With that reduction in jobs looming, the U.K. government says as part of its announcement, “The U.K. government would also ensure a broad range of support for any staff who are affected by the transition.”

“This is an historic package of support from the U.K. government and will not only protect skilled jobs in Wales but also grow the U.K. economy, boost growth and help ensure a successful UK steel industry,” U.K. Business and Trade Secretary Kemi Badenoch says.

“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,” says Tata Group board chair Natarajan Chandrasekaran.