Private steel major Tata Steel on Friday (September 15) said the company and the UK government have announced a joint agreement on a proposal to invest in electric arc furnace steelmaking at the Port Talbot site in Wales with a capital cost of £1.25 billion, inclusive of a grant from the UK government of up to £500 million.

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The project will reduce direct emissions by 50 million tonnes over a decade, the company said.

Tata Steel UK will soon start consultation on the proposal and the transition period, including potential deep restructuring for the carbon-intensive, unsustainable iron and steelmaking facilities at Port Talbot, where many of the existing ‘heavy end’ assets — such as blast furnaces and coke ovens — are reaching the end of their operational life.

The proposed project would also involve Tata Steel’s balance sheet being restructured, with the potential elimination of the current cash losses in the UK operations and non-cash impairment of legacy investments, the company said.

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Further, the company announced its intention to invest approximately £20 million over four years to set up two additional centres of innovation and technology in the UK at the Henry Royce Institute at Manchester (for advanced materials research) and at Imperial College London (for research in sustainable design and manufacturing).

Tata Group Chairman N Chandrasekaran said the proposed investment will preserve significant employment and that it presents a great opportunity for the development of a green technology-based industrial ecosystem in South Wales.

Tata Steel's CEO and Managing Director TV Narendran said the proposed project, with one of the largest investments in the UK steel industry in recent decades, provides an opportunity for optimal outcome for all stakeholders.

Unite general secretary Sharon Graham said, "These plans are disgraceful, short-sighted and lack ambition. Steel is a foundation industry and the opportunity is being missed to make the UK a world leader in steel production. Unite will be fighting tooth and nail not only to save these jobs but to create more jobs in steel."

"Essentially, the UK government has not wrangled a deal to save/protect jobs in the project and that has angered the union," Graham said.

The announcement of the deal came after market hours. During trade, however, shares of Tata Steel ended 40 paise higher at Rs 132.05 (0.30 percent) on the BSE.

(Edited by : Shoma Bhattacharjee)

First Published:Sept 15, 2023 5:59 PM IST