Tata Steel will take a call on its UK assets in the next 12-24 months, as discussions for a ‘green steel’ package with the UK government remain uncertain, the company’s chief executive told Moneycontrol in an interview.
“The assets … cannot survive for long, they are coming to the end of life. We will have to take a call in a year or two,” said TV Narendran, Chief Executive Officer and Managing Director of Tata Steel.
The company has been in discussions with the UK government, seeking financial support for a green transition for its assets. So far, it said, the talks have remained inconclusive.
Tata Steel did not disclose financial details of the package last proposed by the UK government. Media reports have, in the past, pegged it at £600 million for two companies, including Tata Steel UK.
“The progress of discussions with the UK government is also being monitored closely given that based on the initial and subsequent discussions it remains uncertain whether adequate support for the decarbonisation strategy would be agreed,” Tata Steel said in its May 2 note for its March quarter financial results.
“Our proposal was to transition it (the assets) to a greener process and (we are) seeking support from the government for the same. The cash flows of the business do not allow us to fund the transition. The government has come back with a package that is not close to what we are asking, so the conversation is ongoing,” Narendran said in the May 3 interview.
He added that the best-case scenario for the assets would be for the company to receive the package it seeks. “Our fundamental point is that the UK is scrap surplus and exporting. Why should a country not leverage that (scrap) and use it in steelmaking,” he said.
In the worst-case scenario, he added, if there was no package, “...as and when different assets come to end-of-life, we will have to close them. We cannot run an asset if it is not safe. Clearly, in the next two years, some of the critical assets, more of the upstream assets, will come to an end.”
Liquid steel production at Tata Steel’s loss-making Port Talbot Steel Works, Wales, stood at 3.5 million tonnes in FY22.
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