Tata Steel signs contract for new EAF at Port Talbot site
The new EAF, expected to become operational at the end of 2027, will have a capacity for 3 million tonnes per year of steel.
By transitioning to the new EAF technology, the Port Talbot site will be able to produce green steel, Tata Steel said. It will reduce its carbon emissions by 90%, which is equivalent to 5 million tonnes of CO2 per year, the company added.
According to the company, the use of scrap in the new EAF will also reduce the UK’s reliance on imported iron ore.
The new EAF will be funded by a joint investment of Tata Steel and the UK government reaching £1.25 billion ($1.62 billion). Tata Steel will provide £750 million of the whole sum, and the investment of the UK government will be up to £500 million.
The grant from the UK government was approved on September 11.
The new EAF is supposed to replace the two blast furnaces (BFs) at the Port Talbot site, which were operational until recently. The two BFs had a capacity for 5 million tpy, but the company did not use the whole of it and explained that the annual output from the two BFs did not exceed 3 million tpy.
BF5 was closed in July this year, and BF4 was closed in September.
The Port Talbot site produced mainly hot-rolled coil and cold-rolled coil.
According to the contract with Tenova, the Port Talbot site will also receive new ladle metallurgy furnaces, which will allow the production of more complex grades required by manufacturers in the UK and other countries.
“Today marks an important milestone in making low-CO2 steelmaking a reality in Port Talbot, as well as reducing the UK’s carbon emissions and supporting our customers with their own carbon reduction targets,” T V Narendran, chief executive officer of Tata Steel, said during the signing of the contract.
“Technology like the furnaces made by Tenova is critical to decarbonizing the industry, unlocking its potential to provide skilled jobs and creating economic stability for future generations of steelworkers in South Wales,” Jonathan Reynolds, UK Business and Trade Secretary, said.
UK steel sector will face increased demand for scrap
Tata Steel’s new EAF will recycle 2 million-2.5 million tonnes of UK-sourced scrap every year — equivalent to about 2.5 million cars or 250 Eiffel Towers, the company said.
Using predominantly UK-produced scrap means that the company would need to buy high-quality scrap grades with lower impurities that are suitable for flat steel production.
The UK is a net scrap exporter, but with new EAF-based steelmaking capacities coming online, it could become an importer of certain grades, sources suggested.
Another UK steel producer, British Steel also plans to switch to EAF by 2025.
UK government disadvantages Tata Steel
The UK government is putting Tata Steel at a disadvantage compared with its European peers with the comparatively low level of funding it is providing to help the company decarbonise.
The government has committed to provide Tata with £500mn ($635mn) towards the cost of decarbonising its Port Talbot plant in South Wales, which will have an electric arc furnace with a capacity of about 3mn t. This equates to £166/t worth of assistance.
That level of funding would be insufficient to enable other technologies such as two electric arc furnaces or direct reduced iron. Tata itself is investing £700mn in the move, which has widely been criticised by unions and the Labour opposition as a “bad deal”.
In comparison, the German government is giving Salzgitter more than €525/t ($568.80/t) to facilitate its movement to hydrogen-fed green steel. Germany’s ThyssenKrupp will receive almost €870/t to help it transition to green steel at its flagship Duisburg site.
ArcelorMittal is receiving more than €600/t to help decarbonise its Sestao plant in Spain. At its Dunkerque site in France, it has received funding of €850mn to produce 4mn t of lower-carbon steel, equating to €212/t worth of financial assistance. Therefore, most European competitors are receiving greater state assistance.
To feed its electric arc furnace, Tata will still need to import direct reduced iron, pig iron or other metallics to complement the reservoir of domestic scrap. Sources suggest this could be as much as 1mn t/yr.
Should UK electricity prices remain high compared with Europe, there is a risk Tata’s electric arc furnace will still struggle to compete, although the reduction in fixed costs from job cuts and the ability to adjust output quickly will be financially beneficial.
“This steel plant was losing more than £1mn a day, putting it at risk of closure and threatening 8,000 jobs in South Wales and thousands more in the wider supply chain,” a government spokesperson said.
“The government’s unprecedented £500mn grant as part of the £1.25bn investment by Tata Steel will build a new electric arc furnace that protects thousands of long-term jobs, as well as delivering a much greener way of producing steel, cutting carbon emissions in Wales by 22pc.”
