Port Talbot: UK offers Tata Steel £500m to fund green steel switch - report

Tata Steel employs 4,000 people in Port Talbot

Reports that the UK government is in advanced funding talks with Tata Steel to help safeguard the future of its Port Talbot plant have been welcomed by the area's MP.

But Stephen Kinnock said any new deal needed the support of Tata's workforce.

Sky News reported the deal would secure £1bn for the site but could mean up to 3,000 UK job losses in coming years.

It said the draft plans included Westminster committing around £500m of funding.

Tata Steel's parent company would agree £700m of capital expenditure, Sky News said, which would help pay for a switch away from polluting coal-fired blast furnaces.

The company would reportedly commit to building electric arc furnaces, which offer greener, less labour-intensive ways of producing steel than traditional blast furnaces.

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Aberavon MP Mr Kinnock said on X, formerly known as Twitter: "All investment [is] welcome, but electric arc furnaces aren't [the] only route to steel decarbonisation.

"Hydrogen etc must also be in mix, so all types of steel can keep being made, and future of every steel plant safeguarded."

Mr Kinnock added that unions "must be fully involved and workforce must support the plan".

The company's blast furnaces produce huge amounts of carbon dioxide, which drives global warming

Industry sources close to the negotiations said that as many as 3,000 of the company's staff based in the UK could lose their jobs in future as a result.

Tata's Port Talbot operation employs about 4,000 workers.

The steel firm said in a statement: "Tata Steel is continuing to discuss with the UK government a framework for continuity and decarbonisation of steel making in the UK amidst very challenging underlying business conditions given that several of its heavy end assets are approaching end of life.

"Given the financially constrained position of our UK business, any significant change is only possible with government investment and support, as also seen in other steel-making countries in Europe where governments are actively supporting companies in de-carbonisation initiatives."

Tata steelworkers' unions

Speaking on BBC Radio Wales Sunday Supplement on Sunday, Peter Hughes from Unite the union said meetings would take place later this week between Tata, the unions and the UK government.

"We want green jobs but we don't want green jobs at a detriment to jobs and Unite will fight the job losses," Mr Hughes said.

He added that the UK was exporting scrap which could be used to make steel in Wales and the rest of the UK.

"When you look at investment with electric arc furnaces - you need more than one. There are two blast furnaces in Port Talbot at the moment with the coke ovens and the rest of the heavy end.

"If you're really serious about having a steel future - we need at least two, maybe three, electric arc furnaces in Port Talbot to protect the livelihoods and then be able to provide steel for the rest of the UK and make sure the UK government, whether it be this government or a potential Labour government next time - that they do buy and make sure that steel is procured in the UK, made in the UK.

"The last thing we want to do is see our steel industry all full of exports."

Unite said meetings between Tata, the unions and the UK government would take place later this week

Community, the steelworkers' union, said: "We remain in discussions with the company and the unions have not agreed any decarbonisation strategy for Port Talbot.

"We continue to support a solution that will maintain blast furnace production and safeguard the future for all the UK plants. We are ready to use all means at our disposal to protect jobs and our vital strategic industry."

The Welsh government said it was working closely with the company, and that it had repeatedly called on the UK government to urgently bring forward a package of support to secure steel-making at Port Talbot.

"Our focus continues to be to explore all avenues to secure a successful, low carbon future for Welsh steel. This goal is entirely possible, but it requires action and grip from the UK government," it said.

The UK government declined to comment.