Tata Steel seeks fresh UK government funding as Port Talbot project faces delays

Tata Steel has approached the UK government for a fresh multimillion-pound funding package as delays to the transformation of its Port Talbot steel plant threaten to raise project costs and increase pressure on the country’s struggling steel industry, Sky News reported.

The company approached the Department for Business, Innovation and Science in recent weeks to discuss additional government support, according to the report. The request comes on top of the £500 million government grant awarded to Tata Steel in 2023 as part of a £1.25 billion investment to build an electric arc furnace (EAF) at Port Talbot.

The EAF project was originally expected to become operational by early 2028, around three years after construction began. However, delays in securing a grid connection have pushed the expected commissioning date to late 2028 or early 2029.

Tata Steel is understood to have calculated that the delay, along with rising project costs and sales foregone while the new furnace remains unavailable, could substantially increase the overall cost of the transformation.

The precise amount of additional funding sought remains unclear. However, industry sources cited by Sky News said the request could run into hundreds of millions of pounds. UK Business Secretary Jonathan Reynolds has reportedly been briefed on the company's approach.

The Port Talbot project is intended to preserve steelmaking in Britain while shifting the site towards lower-emission production. The plant and associated operations support around 5,000 jobs, although about 2,500 positions have already been lost during the transition.

The site's final blast furnace was shut down in 2024, ending traditional blast-furnace steelmaking at Port Talbot.

Tata Steel has repeatedly warned about the challenges facing its UK operations, including rising costs and competition from cheaper imported steel. One of its senior executives warned last year that Britain had become an unfairly priced dumping ground for cheap imports.

The company was also reported earlier this year to be considering mothballing its UK steel mills as losses increased. Union leaders have highlighted competitive pressures, including larger-than-expected quotas for Indian steel imports under the UK-India free trade agreement. Imports from Vietnam and South Korea have also added pressure to prices of galvanised steel produced by Tata Steel.

When the public-private funding package was announced in 2023, Tata Steel CEO T V Narendran said government support could help make Port Talbot one of Europe's leading centres for green steelmaking, while also supporting economic regeneration and employment in South Wales.

Any additional government funding could bring renewed scrutiny of Britain's approach to the steel sector and wider industrial policy.

The development comes as the wider UK steel industry faces financial and operational difficulties. British Steel, the country's second-largest steelmaker, was nationalised by the government after its Chinese owner, Jingye Group, threatened to close its blast furnaces at Scunthorpe.

The government has subsequently faced criticism from MPs over the company's long-term financial sustainability. British Steel is reportedly costing taxpayers around £1.3 million a day to operate.

Reynolds has also said he would work towards the public acquisition of Speciality Steel UK, more than a year after the country's third-largest producer entered insolvency proceedings.