Tata Steel and UK Government agrees £500 million Grant Funding Agreement
Published: 12 September, 2024
Tata Steel and the UK Government have formally signed a grant funding agreement worth £500m, allowing Tata Steel to proceed with its plans to install a state-of-the-art Electric Arc Furnace at its Port Talbot steelworks in Wales. This signifies the biggest investment in the UK’s modern steel sector, as Tata Steel is inputting another £750m.
The national steel industry is facing challenging market conditions. Costs remain high, the global market is oversupplied, while market demand has weakened, and the highly competitive international business landscape has made capital investment falter.
The Government’s National Wealth Fund manifesto commitment has assigned another £2.5bn to build and attracted investment in the UK’s steel industry. The sector is essential to the nation’s prosperity, supplying steel for major national infrastructure projects, such as for offshore wind turbines needed by GB Energy, transport, housing, and defence.
To meet these ambitions, the next step on the path to growth will be government action to deliver affordable electricity prices. UK Steel analysis, released this September, found that UK steel producers pay up to 50% more than competitors in France and Germany, adding £37 million to the UK steel sector costs. With a switch to more electric arc furnaces, it is expected that the sector’s electricity consumption will roughly double.
Responding to today’s announcement, UK Steel Director General, Gareth Stace, said: “The steel sector wants to remain a pillar of the UK’s economy and today’s grant funding agreement between Tata Steel and the Government means our steel sector can have a brighter future. £1.25bn is one of the biggest investments we’ve seen in the history of the nation’s steel sector.
“We now have a Government that understands the issues facing our industry and crucially is committed to taking decisive action and today it has done just that. To ensure that their significant investment yields returns for our nation, Government must now also deliver the right business environment. Steel businesses need competitive electricity prices, access to good quality steel scrap, and fair competition from international trade.
“The Government clearly intends to make good on its manifesto promise of building up steel with £2.5 billion investment, backing British jobs, growth and economic resilience.”
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