1. What does the agreement between Tata Steel and the UK government mean for the future of the UK’s steel industry?
A: This announcement is a defining moment for the future of the UK steel industry and all the manufacturing, automotive, construction and engineering companies in the UK which are developing green steel-based solutions. The UK government’s support for the development of our decarbonisation pathway will secure a sustainable future for steelmaking in Port Talbot and the supply chains it serves. We look forward to working with all stakeholders to ensure the success of this project.
2. How does electric arc furnace technology work?
A: Electric arc furnaces use high-current electricity to melt predominantly scrap steel.
The current iron and steel making processes at Port Talbot largely use iron ore, coal and other carbon-intensive fuels.
Using electric arc furnace technology, Tata Steel could reduce carbon emissions from its Port Talbot site by 5 million tonnes a year by 2030 – equivalent to the carbon footprint of almost 2 million homes in the UK (almost one in ten of all homes in England and Wales).
3. When will electric arc furnace technology be operational at Port Talbot and how much steel will it produce?
A: The agreement with UK Government is subject to the finalisation of terms, due diligence, requisite approvals, and employee consultations, all of which will be undertaken in the coming months. Following this, electric arc furnace steelmaking would be operational at Port Talbot within 36 months of the receipt of relevant regulatory and planning approvals. The capacity of the new electric arc furnace would be around 3 million tonnes, similar to the output from the Port Talbot steelworks today.
4. How would these proposed changes impact on your employment levels? How many job losses might there be?
A: We recognise the transition to electric arc furnace steelmaking may require restructuring of our end-of-life, carbon-intensive and unsustainable heavy end assets at Port Talbot. We will begin discussions with our trade union partners and we will work hard to carry out any changes in a responsible manner.
Any significant changes impacting our operational footprint will be fully consulted on, communicated and implemented in close cooperation with our trade union partners. We are committed to the communities and local areas we serve.
5. Your press release refers to ‘deep restructuring’ – what does this mean?
A: We recognise the transition to electric arc furnace steelmaking may require restructuring of our end-of-life, carbon-intensive and unsustainable heavy end assets at Port Talbot. We will begin discussions with our trade union partners and will work hard to carry out any changes in a responsible manner.
6. What is happening to your other sites in the UK? Could there be changes there too?
A: We have good downstream and distribution capability at other sites across the UK, processing and distributing products for carmakers, construction companies, packaging and engineering companies.
We operate an extensive network of downstream production assets to meet the specific needs of our many customers in the UK and internationally. While the steelmaking process would change under the proposals we’ve announced, the output of the business will continue to flex to meet the prevailing needs of the market.
7. Why did you choose electric arc furnace technology over hydrogen or carbon capture?
A: We chose EAF technology for this proposal for a number of reasons. Firstly, the UK exports more steel scrap metal than every other country around the world, apart from the United States. We export 8 million tonnes a year, often to countries with lower environmental standards. So we have a plentiful and reliable supply of steel scrap here in the UK for EAF technology and it makes more sense to re-make it into new steel products here for British and other manufacturers.
Secondly, EAF technology is an incredibly well established and proven way of making high-quality steel. Steelmakers in the world’s largest economy, the United States, have invested heavily in new EAF steelmaking technology in recent years, and we’ve seen first-hand the dramatic developments they’ve made to enable them to produce some of the highest-quality steel grades for customers.
Thirdly, many of our existing ‘heavy end’ plants – such as blast furnaces and coke ovens – are reaching the end of their operational lifespans. Further investment in traditional blast furnaces is not financially or environmentally viable due to the increasing environmental and carbon costs. Additionally, investment cycles for new heavy end plants are typically more than 20 years, which means if we were to invest in new coke ovens or a blast furnace today, we would be committing to using coal to make steel beyond 2050. However, the UK government has made clear it wants to phase out the use of coal. More than any other technology, electric arc furnace technology is tried and tested, ready to fill the gap after our existing plants reach the end of their operations lives.
8: Is it true EAF-produced steel is of a lower quality than blast furnace-produced steel?
A: No. It is true to say that most of the steel produced around the world, including in Europe, is made using blast furnaces. Since 2008, however, there’s been a steelmaking revolution in the world’s largest economy, the United States, which has been investing predominantly in electric arc furnace technology. They’ve also arguably led the way in developing ways to produce more complex grades of steels using EAFs so it can be used in some of the most demanding end uses, including in the automotive industry. Looking closer to home, many of our European competitors have also chosen to invest in electric arc furnace technology.
As part of Tata Steel’s investment in the UK, we are looking to establish two new Centres for Innovation at the University of Manchester and Imperial College London. Working with world-leading academia, this multi-million pound investment will help us develop advanced materials for our customers. This will complement R&D we are already doing at the University of Warwick and Swansea University.
9: What support do you want from the Welsh Government in addition to UK Government investment.
A: The Welsh Government currently assist us on a wide range of policy areas including research and development, environmental protection, skills and employment and carbon leakage policies. The Welsh Government will now play an instrumental role in assisting us to build a sustainable future for the south Wales region.
10: How long will the consultation process and due diligence take?
A: We plan to start the consultation process with our trade union partners as soon as possible so that we can move forward with our plans for sustainable steelmaking in the UK. We are acutely conscious of our obligations to our employees, customers and suppliers, and the wider steelmaking community and will seek to carry out any changes in a responsible manner.