Tata Steel on road to transitioning to greener, state-of-the-art steelworks in UK

Tata Steel on road to transitioning to greener, state-of-the-art steelworks in UK
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The UK government announced this week that it had signed off on a £500-million grant funding agreement with Tata Steel to support the Indian steel giant’s green transition towards a state-of-the-art Electric Arc Furnace (EAF) at the Port Talbot steelworks in South Wales.

Business and Trade Secretary Jonathan Reynolds told the House of Commons that the Labour government had succeeded in going much further than the previous Tory government’s pact, delivering a minimum voluntary redundancy payout of £15,000 for full-time employees plus a £5,000 “retention” payment. The pact also includes an offer of paid-for training to give workers a steady income and upskill them for the jobs of the future. 

Reynolds said: “Port Talbot has always been and will always be a steelmaking town. This deal does what previous deals failed to do – give hope for the future of steelmaking in South Wales.

“We know that a cleaner, greener future for UK steelmaking is vital to the industry’s long-term economic stability. The road ahead is not without its challenges, but our steel strategy will set forth a positive vision for the future of the industry, backed by our manifesto commitment to £3 billion of government investment.”

The Department for Business and Trade (DBT) said alongside making the largest investment in the UK steel industry in decades, Tata Steel has also committed to work with the government to evaluate new investments in steel. 

Jo Stevens, Secretary of State for Wales, said: “This improved deal secures the immediate future of Port Talbot steelworks, lays the foundations for future investment, and enhances protections for the workforce across South Wales, all without further cost to the taxpayer.

“As well as negotiating a better deal than the previous government, we have already released millions of pounds of funding from the Transition Board to support businesses and workers in Port Talbot and across south Wales. While this is a very difficult time for Tata workers, their families and the community, this government is determined to support workers and businesses in our Welsh steel industry, whatever happens.”

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Tata Steel has offered its most generous voluntary redundancy package ever for a restructure of this size. Employees who choose redundancy will be paid 2.8 weeks’ earnings for each year of service, up to a maximum of 25 years, according to the terms of the pact.

The DBT claims "watertight conditions" within the grant funding agreement will ensure that the government can “claw back investment” should Tata Steel not fulfill its commitments. This includes increased penalty payments should the company not retain 5,000 jobs across its UK business post transformation.  

T.V. Narendran, Tata Steel Chief Executive Officer and Managing Director, said: “With the UK government’s critical support, this complex and ambitious transformation of Port Talbot has the potential to make the plant one of Europe’s premier centres for green steelmaking.

“We now look forward to the efficient and speedy execution of the EAF project. We will also continue our work with the Transition Board and the UK and Welsh governments to enable this project to be a catalyst for economic regeneration and job creation in South Wales.”

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The Mumbai-headquartered company said as part of this largest investment in the UK steel industry for decades, its £1.25 billion project will safeguard the country’s “steel sovereignty, secure steel making in Port Talbot and preserve 5,000 jobs”.

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.

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