British Steel and Tata UK still in talks with UK government for funds

The two largest UK steel producers, Tata Steel and British Steel, are both continuing talks with the UK government over funding for their low carbon transformation journeys.

According to UK media reports, the government is close to signing an agreement with British Steel, with Secretary of State for Business and Trade Kemi Badenoch visiting the company's operation in Teesside on May 10 and the company's headquarters in Scunthorpe, where the majority of Britain's rail tracks are made.

British Steel President and CEO Xijun Cao said: "We were delighted to welcome the Secretary of State to British Steel and to reiterate the vital importance of safeguarding the future of steelmaking in this country."

"We are confident our proposals, which are subject to appropriate support from the UK government including the adoption of the correct policies and frameworks, will help secure the low-embedded carbon steelmaking the UK requires," A British Steel spokesman said to S&P Global Commodity Insights on May 13.

"We are committed to working with the UK government and need to reach an agreement quickly so we can achieve our ambitious goals, secure thousands of jobs and keep making the steel Britain needs for generations to come."

British Steel, owned by Jingye, is reportedly seeking up to GBP600 million ($753 million) in funds from the government for its GBP1.25 billion decarbonization plan. The company started discussion with the government more than a year ago.

The company already secured planning permission for the construction electric arc furnaces from the local authorities, as its plan involves in shutting its blast furnaces in Scunthorpe and building one new EAF there and one in Teesside.

British Steel has started preliminary talks with trade unions about electrification and has promised to support employees affected by its decarbonization plans.

Meanwhile, Tata UK, after months of dialogue with unions that are ready to call for industrial action as they are not satisfied with Tata's proposed package and the fact that the company will shut down its Port Talbot blast furnaces No. 5 and No. 4, respectively, by the end of June and by the end of September.

The shutdown of the blast furnaces will affect directly 2,800 jobs with unions strongly against this decision. Unite, the main union in the UK, has notified Tata UK that it is likely to call for an industrial action on May 30, according to a person close to the company.

A Tata UK spokesperson was not available for a comment.

The UK produced in total 5.62 million mt of crude steel in 2023, according to offical data, among the lowest annual outputs since the Great Depression in 1931-32. The steel industry is a significant contributor to greenhouse gas emissions, responsible for 14.2% of greenhouse gas emissions from manufacturing and 2.4% of total UK greenhouse gas emissions.

Platts, part of S&P Commodity Insights, assessed UK HRC stable on the day at GBP610/mt basis DDP West Midlands May 9.