Tata Steel’s Green Steel Transition: Challenges and Plans in Europe

The Dutch government and Tata Steel are working on a deal to shift the company’s Ijmuiden plant in the Netherlands to producing steel with lower carbon emissions.

Tata Steel’s chairman, N Chandrasekaran, mentioned in the company’s yearly report that talks with the Dutch government on this decarbonisation plan have begun. They plan to replace one blast furnace before 2030 and then the second one later.

“In the initial stage, we’ve devised a strategy to achieve green steel production by 2030 using direct reduced iron (DRI) and electric arc furnace (EAF) technologies. The DRI will start with natural gas and later shift to hydrogen once it becomes viable and cost-effective,” he explained in his message to shareholders.

Chandrasekaran also mentioned, “We aim to finalise a deal within this financial year.”

Green Steel Plan

Tata Steel presented its Green Steel Plan for converting its 7-million-tonne plant in Ijmuiden to the Dutch government in November 2023. On March 28, 2024, the Dutch Parliament confirmed its support for Tata Steel’s proposal and authorised the government to negotiate further.

According to Tata Steel’s annual report, the Green Steel Plan requires substantial investments from the company and depends on government support, both financially and through policies, for its success.

In a stock exchange announcement, Tata Steel clarified that talks with the Dutch government regarding the proposed decarbonisation are ongoing, cautioning that it might be too early to reach a final decision.

Election Impact on Port Talbot

Transitioning to low-carbon steelmaking in Europe has been a key priority for Tata Steel. In the UK, the company made a deal with the Conservative government in September 2023 to switch from blast furnaces to electric arc furnaces (EAF) at Port Talbot in South Wales.

The project is estimated to cost 1.25 billion pounds, including a grant of up to 500 million from the UK government. However, the deal became a political issue before the general elections on July 4, as restructuring at Port Talbot threatened 2,800 jobs.

The Labour party has asked Tata Steel to pause its plans and wait until after the election, suggesting a ‘better deal’ could be negotiated. The trade union Unite announced a strike starting July 8, with around 1,500 workers in Port Talbot and Llanwern protesting job cuts and the closure of blast furnaces. Tata Steel stated on Friday that if operations’ safety and stability were compromised, it might need to speed up the closure of blast furnaces and related plants.

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