Tata promises electric arc by 2027 as work begins

Greener steel production in Port Talbot will be up and running by the end of 2027, a senior Tata official has said.

On Monday the India-based firm officially marked the start of work to build its new electric arc furnace, which is hoped will reduce the site’s carbon emissions by about 90%.

A union described the announcement as “bittersweet” for the town, which saw the loss of 2,800 jobs when the steelworks blast furnaces were shut in September 2024.

But the UK government said the announcement was a “major win” that will give “certainty to local communities”.

Tata says it is spending £1.25bn to transform the site to greener steelmaking, backed with £500m from the UK government, and says the electric arc plant will support 5,000 jobs.

The project is controversial amid accusations of double standards after Westminster intervened to save Scunthorpe’s blast furnaces, but did not in Port Talbot.

The new furnace will use electricity and will effectively recycle scrap steel, rather than making new steel from iron ore.

Plaid Cymru accused Labour of trying to “rewrite history and win back trust in communities they so readily abandoned”, while the Conservatives said it was an “important milestone” in a plan that originated with the previous Tory government.

UK Business Secretary Jonathan Reynolds joined the Welsh Secretary Jo Stevens, First Minister Eluned Morgan and representatives from Tata Steel for the ceremony, overlooking the lagoon near where the new furnace will be located.

Chairman of Tata Group, Natarajan Chandrasekaran, said 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.”

The chief executive of Tata Steel UK, Rajesh Nair, said after the plant was commissioned “hopefully we’ll see good quality steel” starting to be produced “in early 2028.

Mr Chandrasekaran said the project was a result of “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.”

UK government money was needed, he said, to make the “business case” for the project.

Asked if he regretted that more jobs could not be kept, he added: “We tried our level best to reduce the impact.”

UK government industry minister Sarah Jones said if it did not back the project, “Tata would not be able to put the investment in”.

She defended the different approaches to 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 said the start of the works in Port Talbot was a “bittersweet day” after the “devastating closure of the blast furnaces” at the site.

The steel union’s assistant general secretary Alasdair McDiarmid said: “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 said the milestone was a “major win” made possible by a £500m grant they provided as part of the “improved deal for Port Talbot’s transition”.

Reynolds described it as “great news for Welsh steelmaking”, which would give “certainty to local communities and thousands of local jobs for years to come”.

Jo Stevens said the construction of the new furnace “realises the promise we made to the community” and meant “Port Talbot has a bright future”.

Stevens said the UK government was “aiming to ensure that there is as little as possible hit on the UK steel industry” from US tariffs. The country has imposed a tariff on UK steel of 25%.

Its hoped the US will agree to tariff-free access for steel, but reports in June said the US government was threatening to leave Port Talbot out of a deal because Tata had been importing steel since the closure of the blast furnaces last year.

That means steel could breach US rules that require all steel to be “melted and poured” in the country it is imported from.

“That’s one of the things that we’re talking to the US administration about,” Stevens told BBC Radio Wales Breakfast.

She said Reynolds “is leading the discussions, working hard to secure protections for UK steel”.

Sarah Jones said the UK was the only country “in the world” with a 25% steel tariff. “Everybody else is on 50%”.

Welsh Conservative Senedd leader Darren Millar said it will save “thousands of jobs” and “a key part of the plan announced by the previous UK Conservative government”.

Liz Saville-Roberts, Plaid Cymru’s Westminster leader, said: “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.”