Tata Steel signs connection offer with ESO to power new 2.3 million mt EAF

Tata Steel has signed a connection offer with the Electricity System Operator that involves National Grid building new infrastructure to be able to power the largest UK steelmaker's new 2.3 million mt electric arc furnace by the end of 2027, it said May 20.

This would be an important milestone for Tata Steel UK in its path toward low-carbon transformation as it will ensure the company has one of the key infrastructure in place to operate the new EAF. Tata Steel had announced that it will decommission both blast furnaces at Port Talbot in 2024 and build a new EAF, reducing CO2 emissions by 5 million mt/year.

Tata Steel expects to place equipment orders for the EAF by September, start construction by August 2025 and produce liquid steel by end-2027. During the interim period, the company will send to the UK slabs for rerolling from its Netherlands site, a move not approved by the unions due to the possibility of 2,800 redundancies and fears that the new EAF would never happen. Unions did not reply to S&P Global Commodity Insights for a comment.

Tata Steel's Port Talbot site at Margam is served by a 275-kV substation linked to the larger 400 kV Swansea North substation. Swansea is linked to the southwest Welsh coast by four high voltage power lines to Pembroke docks, home to RWE's 2.2-GW gas-fired power station -- the region's largest by some way. Future power flows to and from Pembroke are set to increase once the 500-MW Greenlink Interconnector to Ireland is completed by end-2024.

Beyond this, the Crown Estate's Celtic Sea Offshore Wind Leasing Round 5 was launched in February for up to 4.2 GW of floating wind in a first phase off the coasts of south Wales and southwest England.

This has led to the Future Port Talbot project, transforming the port into a hub for floating wind farm manufacturing.

Tata's UK blast furnaces have an installed capacity of 5 million mt/year, but in the last few years it produced 3.2 million mt/year and is the UK's biggest single carbon polluter. The UK produced in total 5.62 million of crude steel in 2023, according to the latest data.

The blast furnace and basic oxygen furnace process releases the highest carbon emissions: 2.33 mt of CO2 emission per ton of crude steel. The direct reduced iron and electric arc furnace (DRI-EAF) process releases 1.37 mtCO2e/mt. The scrap steel and electric arc furnace (scrap-EAF) process releases the lowest carbon emissions at 0.66 mt of CO2. In Europe, 57% of steel is produced via the BF route that uses coal as a raw material and the rest from EAFs that use scrap as a raw material, so many European steelmakers are switching their production routes.

Hot-rolled coil prices in the UK fell in the week to May 16 as trading activity remained low and distributors started to offload ex-stock material at competitive rates.

Platts, part of Commodity Insights, assessed UK HRC down GBP5/mt on the day at GBP605/mt basis DDP West Midlands May 16.