Tata Steel signs UK government-backed contract for “green” steel production technology

Tata Steel has signed a contract with metals technology manufacturer Tenova to deliver a new electric arc furnace (EAF) and additional steelmaking equipment for its Port Talbot site in Wales, UK. As a key circular material for packaging, this agreement aims to support the UK’s decarbonization journey.

The EAF, with a production capacity of 3 million tons of steel per year, will melt scrap steel sourced from the UK. The more quality scrap that can be used in new steel production, the lower the demand for raw materials and energy, which in turn leads to a reduction in emissions.

The new furnace, expected to be operational by the end of 2027, is set to reduce the site’s carbon emissions by 90%, cutting approximately 5 million tons of CO2 annually.

T. V. Narendran, CEO and managing director of Tata Steel， says: “This marks an important milestone in making low-CO2 steelmaking a reality in Port Talbot as well as reducing the UK’s carbon emissions and supporting our customers with their own carbon reduction targets.”

Strengthening manufacturing resilience

Amid rising demand for metal packaging driven by geopolitical instability and energy supply shortages, this move will lower the site’s reliance on imported iron ore and enhance the resilience of the UK’s manufacturing supply chains. 

Alongside the EAF, Tenova will also supply ladle metallurgy furnaces, which will enable Tata Steel to refine the molten steel and produce grades required by manufacturers both in the UK and internationally.

Paolo Argenta, executive vice president  atTenova Upstream Business Unit and Rajesh Nair, CEO, Tata Steel UK.The project is currently in the detailed engineering phase, with additional equipment orders expected for the site’s Hot Strip Mill, Casters life extension and Pickle Line. Tata Steel aims to begin large-scale site work by July 2025.

Joint investment with the government

The initiative is backed by a £1.25 billion (US$1.62 billion) joint investment from Tata Steel and the UK government, with Tata Steel contributing £750 million (US$972.8 million) and the government committing up to £500 million (US$648.5). This collaboration supports the UK’s broader goals of decarbonizing, which facilitates achieving recycling targets for steel packaging.

In a previous interview, Nicola Jones, manager for Steel Packaging Recycling at Tata Steel UK shared with Packaging Insights that as the largest steelmaker in the UK, Tata Steel recycles packaging steel from household waste streams.

UK business and trade secretary Jonathan Reynolds comments: “Technology like the furnaces made by Tenova is critical to decarbonizing the industry, unlocking its potential to provide skilled jobs, and creating economic stability for future generations of steelworkers in South Wales.”

“This partnership follows in the footsteps of an improved deal between the Government and Tata Steel. Our upcoming steel strategy will provide further certainty for the sector as we set out our plan for its long-term growth and viability, backed by up to £2.5 billion (US$3.24 billion) for steel.”