Tata to invest £75m in Port Talbot steel plant

Tata to invest £75m in Port Talbot steel plant

Tata Steel has announced that it will finance the repair of a blast furnace at Britain’s largest steelworks in Port Talbot.

The investment is will extend the life of the furnace by seven years and ease concerns about the firm’s commitment to Europe’s steel sector.

Last year, India’s Tata Steel signed a preliminary deal to merge its European steel assets with those of Germany’s Thyssenkrupp in a bid to address steelmaking overcapacity in Europe.

Industry experts have said that a fully relining of a blast furnace would typically cost upwards of £150m and provide an extra 20 years of life, but Tata is currently investing half this amount.

The Port Talbot steelworks earns much less than its European counterparts and, with uncertainty still surrounding the UK’s exit from the European Union, many thought the plant could be at risk.

Now that Tata Steel is looking to extend the life of one of its two Port Talbot blast furnaces, it seems these fears have somewhat subsided.

T. V. Narendran, CEO and managing director of Tata Steel, said: “Globally, steel prices have been buoyant with improved trade position in China, along with cost push from raw materials.

“In India, we have witnessed strong volume growth across the verticals as well as an increase in realisations.”

In 2015, Tata made an attempt to sell of its UK assets, including the Port Talbot plan which was reportedly losing up to £1m a day.

As per a deal that Tata signed with British unions at the end of 2016, the company has committed to no forced redundancies at Port Talbot and to keep two blast furnaces operational at the plant until 2021.

Due to this deal, the blast furnace which Tata is now investing in, blast furnace five, was due to end its life in the next two years, meaning the company was obligated to extend its life by another two years.

Tata is, however, going beyond that with more costly, long-term repairs.

Earlier this month, Tata said it had invested more than 14 million pounds in one of its Port Talbot mills, in a move that would increase capacity by 150,000 tonnes per year.

The Community union, representing workers at Port Talbot, will continue to push for a full re-line of blast furnace five, said Steve McCool, the union’s national officer.

A Tata Steel spokesman said: "We are looking at a range of options as we continue to develop a sustainable UK business for the future.

"There is, however, no definitive decision made yet on any form of blast furnace repair or reline."

Last Friday, Tata reported a five-fold increase in third-quarter profit, boosted by strong volume growth in India and rising steel prices, with share prices rising by 6%.