PORT TALBOT: Government pays EY £1m to vet Tata’s plea for more furnace money

The UK Government is paying accountancy firm EY £1m to check Tata Steel‘s request for more public money to finish its new furnace in Port Talbot.

Known as an electric arc furnace, it melts scrap steel using electricity. It is the heart of the £1.25bn plan to keep steel being made at the Port Talbot works after the last blast furnace closed in 2024.

Tata says the furnace will be able to make 3.2 million tonnes of steel a year.

Sky News reported on Thursday that Tata’s request is understood to run to hundreds of millions of pounds, on top of the £500m the UK Government has already committed to the project.

The Government’s business department awarded EY the contract on 10 August, for “independent financial due diligence and commercial analysis”. It runs until August 2027.

Tender documents are reported to describe the work as supporting the Government’s assessment of Tata’s request for additional support for the furnace.

A grid connection running months late

The furnace was due to be making steel by early 2028. Then National Grid told Tata in June that the high-voltage connection it needs was running six to eight months late.

Tata is understood to now expect the furnace to be running in late 2028 or early 2029, and to have worked out that higher costs and lost sales from the delay will push the overall bill up significantly.

When the delay first surfaced, Stephen Kinnock, the Aberafan Maesteg MP who is now Secretary of State for Wales, said there was “no formal change in the timetable at this stage”.

Thousands of jobs already gone

The furnace plan was meant to protect 5,000 steel jobs across the UK, but around 2,500 are reported to have already gone in the switch.

Cheap imports have added to the pressure. Tata warned in June that the UK’s new import limits left Port Talbot exposed.

The furnace is also politically high-profile: Prime Minister Andy Burnham chose Port Talbot for his first official visit to Wales in August.

Ministers are not saying what they make of Tata’s request. The UK Government has declined to comment, saying any discussions with a private company “would be commercially sensitive”.

Tata bosses are reported to have confirmed last month that talks were under way.

Meanwhile, the first kit is arriving

On site, the work is moving. The first sections of the acid tanks for the line that cleans the surface of steel strip, known as a pickle line, arrived at the works this week, Tata says.

Each section weighs around 10 tonnes and came in through the Port of Sheerness. The company says they are the first of a growing number of major deliveries due over the coming weeks and months for both the pickle line and the furnace.

Mark Jones, from the pickle line project team, said: “It’s been a long, long time coming. We’ve been on the project now for around 18 months and it’s all been about the planning stage up until now.”

He said it was “the first time we’ve actually seen something happening from the mechanical aspect”.

Author

Kit Peters

Kit Peters is a journalist and the editor of Swansea Bay News, covering Swansea, Neath Port Talbot and Carmarthenshire since 2020.