Amid little hope of receiving a £1.5 billion subsidy package from the UK government to transition to green energy, Tata Steel is likely to halt its operations in Britain, according to an ET report.
Tata Steel owns the UK's largest steelworks at Port Talbot in South Wales and employs around 8,000 people across its operations in the country. ET reported that Tata Steel was looking at an exit from the UK as it was not hopeful about obtaining funding from the current British government led by Liz Truss.
The plan is for Tata Steel to shut its two blast furnaces at Port Talbot, stop primary steelmaking and instead build two electric arc furnaces. This is essential to keep the plant functional. These arc furnaces would recycle scrap steel and are less carbon-intensive than blast furnaces. Building the electric arc furnaces and decommissioning the existing blast furnaces would cost about £3 billion, the ET report said.
"As part of the UK's de-carbonisation journey and rising carbon costs in the country, it is necessary for Port Talbot to transition to alternative technologies to remain viable," a Tata Steel source told the publication.
Tata Group Chair Natarajan Chandrasekaran had previously said in July, "We have been in discussions over the last two years and we should come to an agreement within 12 months. Without this, we will have to look at closures of sites."
An executive close to the development told ET, "Exiting businesses that are also supporting local communities has never been our group philosophy, but it has to be acknowledged and supported by the government too."
A Tata Steel spokesperson told the publication that the company was not currently in discussions with potential buyers for the UK business. The Indian steel giant is one of Europe's leading steel producers, with steelmaking in the Netherlands and the UK, and manufacturing plants across Europe. The company’s tube products are used in many industries, including construction, machinery fabrication, energy and automotive production.
In June 2022, Tata Steel said it had set a goal to produce net-zero steel by 2050 and to reduce CO2 emissions by 30 per cent by 2030.
(With inputs from agencies)