According to those with knowledge of the situation, the future of Tata Steel’s UK operations is in jeopardy as negotiations over the level of government support continue with the Rishi Sunak administration.
According to executives familiar with the scenario, the British Prime Minister has told the Tata group that the government will improve upon its initial subsidy offer to modernize and decarbonize the company’s Port Talbot facility.
The reported sources added that a backup departure strategy is also being developed in case the negotiations fall through. Sunak spoke with N Chandrasekaran, the chairman of Tata Sons, just last week when he visited the UK to make the announcement about the group’s intention to build a factory to produce batteries for electric vehicles.
According to the above individuals, Chandrasekaran and the Tory Prime Minister’s anticipated meeting in September will determine what happens to the UK steel mill. The departure plan will be put into action, they stated, if the two sides are unable to come to an agreement within the next two months.
Also read, Old GST dues weigh on IBC bidders
No advancements in Tata Steel and UK Government talks:
In January, it was widely reported that Tata Steel, the owner of Port Talbot, the largest steelworks in the UK, would get about $300 million to produce electric arc furnaces at its UK facilities. Tata Steel hasn’t confirmed the amount, but it has said that it is too little. According to officials informed of the development, there hasn’t been any notable advancement in the conversations between the Sunak government and Tata Steel since that time.
Koushik Chatterjee, executive director, and chief financial officer of Tata Steel, has reportedly been tasked with creating the exit strategy. The plan will take into account how leaving the UK could affect all parties, including employees and labor unions, they added.
Despite the lengthy wait for necessary financial support from the government, Tata Sons’ decision to establish the 4 billion pound mega plant in the UK after first shortlisting Spain is considered as a potential attempt to lessen the effect if it must depart the steel business.
According to Tata Steel, the two blast furnaces at the Port Talbot plant, which are almost at the end of their useful lives, don’t generate enough profit to warrant new investments. According to the UK’s decarbonization objectives, replacing the high-emission blast furnaces with less carbon-intensive electric arc furnaces is proposed. By 2050, the island nation intends to have net-zero emissions of greenhouse gases.
For more business news, click here.