It is understood that the UK Government is in advanced talks over a financial package to safeguard long-term steelmaking at Port Talbot. Sky News first reported that the UK Government were likely to make a £500m aid package with the Indian parent company of Tata investing £700m in capital expenditure which would bring the total investment to more than £1bn.
Tata, which employs 4,000 people at the Port Talbot plant, told WalesOnline any investment would be towards safeguarding the long-term future of the steelworks through decarbonisation. A company spokesman said: “Tata Steel is continuing to discuss with the UK Government a framework for continuity and decarbonisation of steelmaking in the UK amidst very challenging underlying business conditions given that several of its heavy end assets are approaching end of life.
“Given the financially constrained position of our UK business any significant change is only possible with government investment and support as also seen in other steelmaking countries in Europe where governments are actively supporting companies in de-carbonisation initiatives.”
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The cash would likely go towards building electric arc furnaces at the plant rather than the blast furnaces. This involves using scrap steel and produces far less carbon. There are already such furnaces in the UK and it is a well-understood technology.
At present the plat produces 7m tons of CO2 a year and the switch would see a huge reduction in that. The overall cost of this depends on many factors including how many furnaces are built but previous estimates have suggested it would be up to £2bn.
Even if spades were to go into the ground tomorrow it could take four years for electric arc furnaces to be built. In terms of jobs there is likely to be a reduction in the total workforce because of decarbonisation. The numbers are unclear but sources within Tata have told WalesOnline there are a significant numbers of older workers who could be willing to take early retirement which may help manage this process.
The Welsh Government has repeatedly declared its support for continued steelmaking in south Wales but has said it doesn’t “have the financial firepower” needed to safeguard the industry and have called on the UK Government to act.
