Tata Steel May Exit UK If British Govt Denies ?1.5 Billion Funding For EV Transition

To ensure that Tata Steel continues its presence in the UK, the company is hoping that the British government will go beyond platitudes and provide the ?1.5 billion funding for the transition to green energy. In the absence of this, Tata Steel might make an exit from the UK. All this comes amidst the company¡¯s plans to replace the carbon-intensive blast furnaces with electric arc furnaces over the next few years, as per a Moneycontrol report.

In September 2022, when a new Prime Minister takes charge in the UK, this would be one of the key decisions that the incumbent would have to make in the coming months.

India¡¯s Tata Group and Chinese Jingye-owned British Steel own Port Talbot and Scunthorpe steelworks, respectively, both of which reportedly produce over 85% of the total annual steel produced in the UK. Both the sites at present need to transition to green energy in order to meet the UK's commitment to net zero.

Tata's Port Talbot is the UK¡¯s largest steel plant and employs 4,000 people, while Scunthorpe provides 3,000 jobs.

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The UK makes about 70% of the 10 million tonnes of steel it consumes, and there is pressure on the government to shoulder the green bill.

The report mentioned that N. Chandrasekaran, the Chairman of Tata Group, told the Financial Times that unless the UK government comes forward, the Port Talbot plant could be shut, and there is an increased focus on the estimated ?6 billion required to reduce carbon emissions in the steel sector.

Other countries in Europe, too, have been taking steps to help key sectors, including steel, to reduce carbon emissions. Europe¡¯s largest steel-making site in Dunkirk, France, which is owned by ArcelorMittal, will see an investment of 1.7 billion Euros by the French government. The Liberty Group will also benefit from government help to its plants in France and Romania to reduce emissions, the report mentioned.

Also, despite posting a loss of ?347 million in the previous year, Tata Steel UK reportedly managed to clock an ?82 million pre-tax profit in the year ending March 2022. The steel it produces is used in the automobile, train and food industries in the UK and employs 9,000 people, including 4,000 at Port Talbot. But there¡¯s more to it. Thousands more are employed indirectly in this case.

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Also Read: Tata Technologies To Launch IPO In FY 2022-23

Not The First Tata Steel Exit Plan In the UK

This is not the first time the company is contemplating the thought of leaving UK. It has already done that partially. In 2016, when Cyrus Mistry was the Chairman, the Tata Group had announced plans to sell its UK steel operations as it was said to be losing ?1 million every day. Then, as part of its restructuring, Tata Steel UK sold its speciality steel business to Sanjeev Gupta¡¯s Liberty in 2017 but kept the Port Talbot plant. The group had entered the UK steel sector when it bought Corus in 2007, to emerge once again as a key steel manufacturer for Britain, as per the report.

Now it remains to be seen whether Tata Steel gets the required ?1.5 billion funding from the British government, denial of which may result in the company exiting the UK after shutting down its Port Talbot plant,

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