Tata Steel May Exit UK In The Absence Of UK Government Subsidies
October 15, 2022: Tata Sons is considering exiting Tata Steel’s UK business with no hope of securing a £1.5bn subsidy package from the Liz Truzz government for the proposed transition to green energy.
The company said it needs financial assistance to switch from high-carbon blast furnaces to electric arc furnaces in the coming years to stay operational, the Economic Times reported.
Tata Steel sees no point in waiting for the UK government’s decision on the subsidy package, as the latter appears to be uninterested; the company, instead, is looking for exit options.
The Tata Group company, which has had a significant presence in the UK steel market, has widely expressed concerns about funding to remain viable.
Existing businesses supporting local communities have never been the group’s philosophy, but they should also be supported by the government, a company executive close to the development told ET.
“We have been in talks for the last two years and there should be a resolution to this by now, with the only other option being site closures,” the executive was quoted as saying.
However, a Tata Steel spokesman said the company is still actively engaging the government on the subsidy issue and is not currently in talks with any potential buyers.
“As stated above, as part of the UK’s decarbonisation journey and rising carbon costs in the country, there is a need for Port Talbot to transition to alternative technologies to remain viable,” said a company spokesperson. cited.
The Port Talbot unit has the capacity to produce 5 million tonnes of steel per year.
Tata Steel is seeking political intervention from the UK government to encourage the transition to green steel and ensure a cost-competitive environment, and secondly, through a partnership to finance the capital-intensive drive towards green technologies.
Tata Steel UK’s demands are fueled by the UK government’s decarbonisation push and the company’s high operating costs.
The steelmaker is looking to close its two blast furnaces at the Port Talbot plant in Wales which are also nearing their useful lives.
Replacing the two furnaces with electric arcs will reportedly cost £3bn, but the business does not justify the cost and so the company is seeking half the capital from the British government.
Port Talbot employs up to 8,000 people, a key incentive for the British government to consider the subsidy package.
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