UK low-emission project facing delay over power access issues: Tata Steel

Tata Steel may have to defer the timeline of its 1.25-billion-pound UK project for transitioning to a low-carbon steel-making process by six to eight months, as the company is facing delays in "securing access to electricity".

As part of its decarbonisation plan, Tata Steel is setting up the UK's largest low-carbon EAF (electric arc furnace) project of 3.2 million tonnes capacity at Port Talbot with 1.25 billion pounds of investment to replace its now-shut blast furnace plant of similar capacity.

Before experiencing delays in securing power access, the company was looking to begin operations of the EAF project by late 2027 or early 2028.

"While we are working with ESO (Electricity System Operator) and National Grid for the new electrical infrastructure, National Grid has formally alerted to us that their connectivity project is delayed," said Koushik Chatterjee, Executive Director (ED) & Chief Financial Officer (CFO) at Tata Steel.

The National Grid has informed about some potential delays versus the original planned date of the high voltage connection, he said, adding that the company is working with all the stakeholders, including the UK government, to mitigate the impact and develop revised schedules.

The official noted that major demolition works at the site have been completed, and fabrication and delivery of equipment are continuing at a pace. Securing access to higher-power electricity is critical for the planned transition.

The project -- being built up with 500 million pounds of government support -- aims to reduce site-level CO2 emissions by 90 per cent - equivalent to 5 million tonnes annually.

Meanwhile, on Wednesday (June 3), the project site at Port Talbot witnessed a fire incident. However, all personnel were accounted for and evacuated from the area safely, Tata Steel UK said on Thursday.

Chatterjee further said that his company is working with National Grid and the UK government to resolve the issues.

"We are working with the UK government, the National Grid and (Electricity System Operator(ESO), which is the electricity supplier, to see if we can mitigate it, but somewhere between six months to eight months will certainly be there, maybe higher, after we have built the plant," Chatterjee said, responding to a question on whether the company is seeing any delays in commissioning the project.

The official said Tata Steel is working out if the duration of the delay can be reduced, but ruled out any possibility of avoiding the situation.

"We are actively working to see if we can reduce it (the delay) further, but there will be some imminent delays," the ED & CFO said without sharing further details.

In May 2024, Tata Steel signed a connection offer with the Electricity System Operator (ESO). The agreement involves National Grid building new electrical infrastructure capable of powering the 3.2 million-tonne electric arc furnace by the end of 2027.

As per information shared by Tata Steel, NESO (the National Energy System Operator) is a public body which manages the connection process, including the connection contract with TSUK. NESO also manages the operations of the electricity grid in the UK.

National Grid Electricity Transmission (NGET) is a private company that builds, owns, and maintains the connection.

A Tata Steel spokesperson said: "This is a major industrial project, and like all projects of this scale, timelines continue to evolve as detailed engineering, construction, and infrastructure work progresses.

"While we are still discussing potential adjustments to the commissioning timetable, we are working closely with National Grid, our construction partners, and the UK government to deliver the project safely and as quickly as possible."  The Tata Steel Group is one of the world's leading steel producers, with an annual crude steel production capacity of 35 million tonnes. It is also among the most geographically diversified steel companies globally.