Trade unions want the UK government to commit more cash to Tata Steel, enabling it to invest more in decarbonising south Wales' Port Talbot plant.
The plan drawn up by consultancy Syndex, on behalf of trade unions, would require another £683mn of investment, Alisdair McDairmid, assistant general secretary of Community Union, told parliament's Welsh Affairs Committee.
"We would certainly be looking for government to make a significant contribution to that. Overall the total figure would be along the lines of £800mn-1bn, up from £500mn, which would be more in line with the support" from other European governments, McDairmid said.
The Syndex plan would keep a blast furnace running, but even union sources agree it would be impossible to run the unit until 2032 while operating a 3mn t/yr electric arc furnace.
"Running a steel melt shop while trying to build an EAF in that steel melt shop puts in a lot of risk because you're looking at moving liquid metal at a very high temperature while trying to construct something," T V Narendran, managing director of Tata Steel, told the committee.
Running the unit without coke ovens would also mean continued losses, which government will not cover, Narendran said. Around 33 of the company's 88 coking ovens are operating, with the assets near the end of their life.
The German government is investing four times as much in ThyssenKrupp than the government is in Tata, McDairmid added. ThyssenKrupp is getting around €2bn from Berlin for decarbonisation, but a significant portion of this will subsidise the purchase of hydrogen for the next decade. Tata Steel is receiving around £166/t in aid from the government, much lower than the levels of support European governments are providing to steelmakers.
Running direct reduced iron units in Europe has largely been uncompetitive, except in regions with plentiful and competitive energy supply, such as Sweden. It is only government support that enables the move to DRI in Europe.
Tata has not ruled out building a DRI in Port Talbot, but suggests it would need more funding and competitively priced gas. The company's current plan envisages EAF steel being poured into its existing casters, and being rolled on its current hot strip mill, which is more than half a century old. argusmedia
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