The Port Talbot facility of Tata Steel will get £500 million from the UK government

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

According to the company, the project will cut direct emissions by 50 million tonnes over a decade.

Tata Steel UK will soon begin consultation on the proposal and the transition period, which could include a significant restructuring of 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.

According to the company, its proposed project will also restructure Tata Steel's balance sheet, potentially eliminating existing cash losses in the UK operations and non-cash impairment of legacy investments.

The company also announced its intention to invest about £20 million over four years to establish two more innovation and technology centers in the UK at the Henry Royce Institute in Manchester (for research on advanced materials) and at Imperial College London (for study on sustainable manufacturing and design).

N Chandrasekaran, the chairman of the Tata Group, stated that the proposed investment will preserve a considerable amount of employment and that it offers opportunities for the growth of an industrial ecosystem based on green technology in South Wales.

According to TV Narendran, CEO and Managing Director of Tata Steel, the proposed project, one of the greatest investments in the UK steel sector in recent years, offers an opportunity for the best results 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.