Status quo in UK can't continue; bound to take decision in next 2 yrs: Tata Steel CEO
Tata Steel owns a 5 million tonnes per annum capacity asset -- the UK's largest steelworks at Port Talbot in South Wales -- and employs 8,000 people. The loss-making facility has been impacted by carbon emission costs and high energy costs.
Tata Steel needs to take a call on the future of its UK operations in the next year or two as the assets are nearing the end of life and the status quo cannot continue, the company's global CEO and Managing Director T V Narendran said. Tata Steel has sought a financial package from the UK government for replacing two blast furnaces, which are nearing the end of life in 12-24 months, and bringing down the carbon footprint at its Port Talbot facility in South Wales.
The status quo cannot continue, Naredran said, adding that the company will either have to shut down the operations there or it will have to execute the decarbonisation plans with the help of a financial package from the UK government.
The company is talking to the UK government for a package because the assets are coming near the end of life. "The status quo can't continue. Those assets will either have to be shut down or we have to transition into a new process route, so there are some calls that need to be taken in the UK in the next year or two," Narendran told PTI.
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When asked if the company would exit the UK in the absence of monetary aid from the UK government, he said, "In UK, it's more a question of discussion with the government because the government is in dialogue with us to see what support they can give, what support they can't give, so we will have to evaluate based on our conversations with the government."
Tata Steel owns a 5 million tonnes per annum capacity asset -- the UK's largest steelworks at Port Talbot in South Wales -- and employs 8,000 people. The loss-making facility has been impacted by carbon emission costs and high energy costs.
Tata Steel company had sought 1.5 billion pounds from the UK government to execute its decarbonisation plans under which it will install new plant machinery with low emission technologies.
However, the British government earlier this year made a counter offer which was much lower than the company's expectations.
"If the government agrees...In 3-4 years we can build a (new) steel facility of course it also depends on the permitting process, so that is where...Again you'll have to work with the government to see that we get the permissions fast. So, that's why we are saying, the sooner we take these calls, the better it is and that's the urgency we are conveying to the UK government," he said.
The company is still pursuing with the UK government its request for the required package, he added.
Tata Steel has posted a steep fall of 84 per cent in its consolidated net profit at Rs 1,566.24 crore for the quarter ended March 2023, dragged by lower income.
The company stated that the board has considered reasonably possible scenarios to stress test the financial position of both the UK and Mainland Europe businesses, including the impact of lower steel margins against the annual plan and the mitigating actions the Group could take to limit any adverse consequences to liquidity in the annual impairment assessments.
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