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Tata Steel’s greener production facility in Port Talbot is slated to be operational by the close of 2027, according to a senior executive from the company.
The India-based firm formally commenced construction on its new electric arc furnace on Monday, a project anticipated to reduce the site’s carbon emissions by approximately 90%.
A union representative characterized the announcement as “bittersweet” for the town, which experienced the loss of 2,800 jobs following the closure of the steelworks’ blast furnaces in September 2024.
However, the UK government hailed the announcement as a “major win” that will provide “certainty to local communities.”
Tata Steel reports investing £1.25 billion in the transformation of the site to greener steelmaking, supported by £500 million from the UK government. The company asserts that the electric arc plant will sustain 5,000 jobs.
The project has faced controversy amid accusations of double standards, referencing Westminster’s intervention to preserve Scunthorpe’s blast furnaces while not doing the same for Port Talbot.
The new furnace will utilize electricity and recycle scrap steel, diverging from the traditional method of producing new steel from iron ore.
Plaid Cymru accused Labour of attempting to “rewrite history and win back trust in communities they so readily abandoned,” while the Conservatives described it as an “important milestone” in a plan that originated under the previous Conservative government.
UK Business Secretary Jonathan Reynolds joined Welsh Secretary Jo Stevens, First Minister Eluned Morgan, and representatives from Tata Steel for the ceremony, overlooking the lagoon near the future location of the new furnace.
Chairman of Tata Group, Natarajan Chandrasekaran, stated that the Port Talbot site “has been going through difficulties for a long time, and we are very glad that we could work out this whole transformation to green steel.”
Speaking to BBC Wales, he said: “We believe we will get this project done, as planned, before the end of 2027.”
He attributed the project to “years of losses.”
“The significant investment that we made here in 2007-2008 has been pretty much wiped out. For years this plant has not been competitive enough. We needed to redo this whole project.”
He emphasized that UK government funding was necessary to solidify the “business case” for the project.
When asked if he regretted the inability to retain more jobs, he responded: “We tried our level best to reduce the impact.”
UK government industry minister Sarah Jones stated that without the government’s backing, “Tata would not be able to put the investment in.”
She defended the differing approaches taken with Port Talbot and Scunthorpe.
“The company [in Scunthorpe] was not acting in good faith – we had to intervene or thousands of jobs would have gone overnight.”
Community Union described the commencement of works in Port Talbot as a “bittersweet day” following the “devastating closure of the blast furnaces” at the site.
The steel union’s assistant general secretary, Alasdair McDiarmid, stated: “Today should represent the first step towards rebuilding our steel industry and creating new high-quality jobs for our steel communities.”
“We must see further investment to develop and grow the business, both here in Port Talbot and across all the crucial downstream sites.”
The UK government asserted that this milestone was a “major win” facilitated by a £500 million grant provided as part of the “improved deal for Port Talbot’s transition.”
Reynolds described it as “great news for Welsh steelmaking,” providing “certainty to local communities and thousands of local jobs for years to come.”
Jo Stevens stated that the construction of the new furnace “realises the promise we made to the community” and signifies that “Port Talbot has a bright future.”
Stevens added that the UK government is “aiming to ensure that there is as little as possible hit on the UK steel industry” from US tariffs. The US currently imposes a 25% tariff on UK steel.
There are hopes that the US will agree to tariff-free access for steel, but reports in June suggested the US government was threatening to exclude Port Talbot from a deal due to Tata’s steel imports since the closure of the blast furnaces last year.
This means that steel could violate US rules requiring all steel to be “melted and poured” in the country from which it is imported.
“That’s one of the things that we’re talking to the US administration about,” Stevens told BBC Radio Wales Breakfast.
She confirmed that Reynolds “is leading the discussions, working hard to secure protections for UK steel.”
Sarah Jones stated that the UK is the only country “in the world” facing a 25% steel tariff, while “everybody else is on 50%.”
Welsh Conservative Senedd leader Darren Millar said it will save “thousands of jobs” and represents “a key part of the plan announced by the previous UK Conservative government.”
Liz Saville-Roberts, Plaid Cymru’s Westminster leader, stated: “While ministers pat themselves on the back, local people remember all too well how this government stood by and allowed the last blast furnace to close, costing 2,800 skilled workers their jobs and ripping the heart out of the town’s economy.”
First Minister Eluned Morgan said: “Seeing spades in the ground today provides a tangible sign of Tata’s intention to continue producing steel in the area, an industry which has provided quality jobs to local people for generations.”
Liberal Democrat MP David Chadwick added that the “people of Port Talbot won’t easily forget, or forgive, the [UK] government’s failure to step in and protect local jobs, as they did in Scunthorpe.”
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