It is “only right” that a decision on taxpayer support to safeguard Tata’s UK steel plants will have to wait until the new prime minister is in place, Welsh Secretary Sir Robert Buckland has said.
Tata has been in talks with the Government about its decarbonisation plans, but the Tory leadership contest looks set to delay the process until either Liz Truss or Rishi Sunak is in No 10.
In an interview with the Financial Times earlier this month, chairman of Tata Group Natarajan Chandrasekaran warned that a transition to a greener steel plant was "only possible with financial help from the Government".
Read more: Tata says Port Talbot steelworks under threat without UK Government financial support
Tata is reportedly seeking around £1.5bn in UK financial support to reduce its emissions.
The FT said that as part of a £3bn green investment strategy, Tata intends to convert its Port Talbot operation from fossil-fuel powered blast furnaces to electricity-powered arc furnaces.
This would effectively see an end to primary steelmaking from raw materials and steel being made from recycling steel, which would significantly reduce emissions although the electricity demand would be enormous.
Tata is looking for the UK Government to provide half of the £3bn investment cost.
Mr Chandrasekaran said action to close UK operations would be taken in 12 months if a financial support package from the Westminster was not forthcoming.
Tata's primary steelmaking plant in Port Talbot employs around 4,000 with 8,000 in total in the UK with its downstream businesses, which include those at Shotton and Trostre.
Unions said they are particularly worried about the future of the giant Port Talbot plant in South Wales as well as Tata’s other Welsh sites.
Decisions will have to be made by the incoming administration, due to be in place in early September.
Mr Buckland insisted the Government was committed to maintaining a domestic steel industry but major decisions on the use of public money would have to wait until Boris Johnson’s replacement is in office.
He would not confirm Tata’s £1.5 billion demand - “we need to be careful about the figures” – but some element of state aid was being discussed.
Mr Buckland said the discussions "have obviously been based for some time on an element of Government subsidy to help the transition” from the old furnaces to “something much less carbon heavy”.
He said: "It’s something the British Government strongly supports, we believe fundamentally in the sovereign capability of the UK to produce steel and Port Talbot is the epicentre of that. I think it’s only right that those decisions are made by the new prime minister.
“That doesn’t mean that the lines aren’t open between now and then, far from it.”
Mr Buckland added the fact that he and Business Secretary Kwasi Kwarteng were “reiterating our belief in a sovereign capacity in the UK to produce steel” should “be a very clear indication to Tata and to others that we are deeply committed to a sustainable future for our steel industry”.
Read more:
