Tata Steel UK has said it wants a “level playing field with European competitors” in order to achieve its decarbonisation plans. Speaking in front of the Senedd’s Climate Change, Environment and Infrastructure Committee, the company said it wanted the same government support already being delivered to steelmakers in Europe.
“Salzgitter has received one billion euros in support towards their decarbonisation efforts, that’s half the capital investment they require to make the transition,” said director of decarbonisation Huw Morgan.
“What we're asking for is a level playing field in terms of investment, in terms of competitive energy prices, and a competitive policy landscape that allows us to compete fairly with our European neighbours. That's really where we start and that's the basis on which those discussions take place.”
Read more: Wales' leading soft drinks firm Radnor Hills in multi-million pound expansion
The steelmaker, which has its primary steelmaking plant in Port Talbot, is calling on the UK Government to provide £1.5bn in financial support to reduce its emissions as part of a £3bn green investment strategy. It says it is currently in on-going negotiations with the UK Government on what financial support can be agreed. Latest reports suggest the current offer stands at £300m.
Last July, chairman of Tata Group, Tata Steel UK’s parent company, Natarajan Chandrasekaran said action to close UK operations would be taken in 12 months if a financial support package from 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. With no additional funding mentioned in the Chancellor’s Spring Statement, it has been reported that Tata could shut down one Port Talbot blast furnace unless long-term UK Government support was announced by July.
When asked whether Tata had any intention of closing one of its blast furnaces, Mr Morgan said the company was looking at a range of different outcomes on its future with and without government support. He added that no decision had been made on its steelmaking sites in Wales if an agreement with the UK Government could not be reached.
“We'll wait for the conversations and negotiations between the parent Tata Group and the UK Government to conclude. Any agreement that is reached we'll discuss with trade unions,” he said.
Tata is currently investing millions in decarbonising its current assets including the replacement of stoves in its two blast furnaces, at a cost of £2m, to reduce the amount of carbon dioxide.
“We’re investing in the current blast furnaces to ensure that we can reduce the amount of coal that we burn and therefore our CO2 emissions,” said Mr Morgan. “We’re also investing in our power plant that will see us better utilise our gases on site to generate more electricity and reduce the amount we pull from the grid so we can be self sufficient.”
Tata is also looking at using land it owns for renewable energy, such as wind and solar, and increasing the amount of scrap steel used in its steel plant. The steelmaker currently uses 17% scrap steel but said that every 1% increase in scrap used reduces 100,000 tonnes of CO2 produced.
“We're not able to generate sufficient electricity in order to meet our needs just based on the sheer volume of electricity required, so there would still be a pull on the grid. What we'd look to continue to do is consume electricity that is renewable partly from the floating wind farm in the Celtic Sea to produce green steel,” said Mr Morgan.
However, Wales was “years away” from producing enough green energy to meet Tata’s energy needs.
“We’re years and years away from that technology”, said Mr Morgan. “There's not enough green electricity to enable water to be split into hydrogen and oxygen which would be green hydrogen. Ultimately if you want to make green steel you need green hydrogen, so it's a long way off.”
As part of the £3bn green investment strategy, Tata is looking at different ways to decarbonise. One option would be 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 steel making from raw materials with steel being made from recycling steel instead.
It would significantly reduce emissions although the electricity demand would be enormous and arc furnaces require significantly less workers than the existing blast furnace operations.
The other option, which would also require significant investment, is to maintain the two blast furnaces at Port Talbot, but employ carbon capture and storage technology- using the carbon to provide power. While technology is advancing in carbon capture and storage, electric arc furnaces have a proven track record.
The two blast furnaces at Port Talbot have had investment to extend their production lives. Blast furnace 4 in 2012 had its life extended by 20 years to 2032. Blast furnace 5 will expire in 2026, following investment in 2018.
Read more:
