Ailing steel sector to get help

5th May 2016


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  • Mitigation ,
  • Management/saving ,
  • Business & Industry

Author

Ffion Wilson

Government support for buyers of Tata Steel's UK operations could include funds to improve energy efficiency and environmental protection measures.

The business department and Welsh government have announced that a package of support worth hundreds of millions of pounds would be made available on commercial terms to potential buyers of Tata Steel UK. They also said further backing, in the form of additional grant funding, would be considered to support the development of power plant infrastructure, energy efficiency and environmental protection measures, research and development, and training.

Tata UK has four sites in Wales, including Port Talbot, the UK’s largest steel operation. First Minister for Wales Carwyn Jones said: ‘We need to see a long-term strategy to reduce energy prices and improve energy efficiency for energy-intensive industries in the UK.’

Trade body UK Steel has highlighted energy costs as one of the reasons for the problems facing the industry. ‘UK energy costs remain uncompetitive for industrial users. Unilateral policies like the carbon price floor continue to undermine the steel sector’s competitiveness by as much as £20 per MWh compared with Germany,’ it said. Tata partly blamed high manufacturing costs, such as the price of electricity, for the decision to put its UK operations up for sale.

It had previously complained that Europe’s steel industry faces environmental rules, such as the EU emissions trading system, which is not imposed on nations outside the bloc. ‘The tragic result of such rules is to import CO2 and export jobs. This must change and it must change fast: fair competition means playing by the same rules,’ Tata’s European chief executive, Karl Koehler, said in February.

Meanwhile, Swedish companies SSAB, LKAB and Vattenfall have launched a project to develop a steel production process that emits water rather than CO2.

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