Tata Steel shares dip over 2% as UK project may face 6-8 month delay amid electricity access issues
Shares of Tata Steel fell 2% to Rs 202 on the BSE on Monday amid reports that it may have to push back the commissioning
Shares of Tata Steel fell 2% to Rs 202 on the BSE on Monday amid reports that it may have to push back the commissioning timeline of its 1.25-billion-pound low-carbon steel project in the UK by six to eight months due to delays in obtaining access to the required electricity infrastructure.The company is building a 3.2 million-tonne electric arc furnace (EAF) at Port Talbot as part of its decarbonisation strategy. The project, which involves an investment of 1.25 billion pounds, is intended to replace the site's blast furnace operations of similar capacity that have now been shut down.Before the latest setback, Tata Steel had been targeting the start of operations by late 2027 or early 2028. However, delays linked to the power connection process have created uncertainty around that timeline, a news report by PTI stated. Koushik Chatterjee, Executive Director and Chief Financial Officer of Tata Steel, said the company has been working with the Electricity System Operator (ESO) and Grid on the new electrical infrastructure.
However, Grid has formally informed Tata Steel that its connectivity project is running behind schedule.According to Chatterjee, Grid has flagged potential delays compared with the originally planned date for the high-voltage power connection. He said Tata Steel is engaging with all stakeholders, including the UK government, to minimise the impact and establish revised timelines, the report added. The company said major demolition work at the Port Talbot site has already been completed, while fabrication and delivery of equipment continue to progress. Access to higher-capacity electricity remains a critical requirement for the transition to electric arc furnace-based steelmaking.The project has secured 500 million pounds of support from the UK government and is expected to cut site-level carbon dioxide emissions by 90%, equivalent to around 5 million tonnes annually. Separately, the Port Talbot project site witnessed a fire incident on June 3. Tata Steel UK said on Thursday that all personnel were safely evacuated and accounted for, with no injuries reported.
Chatterjee said Tata Steel is continuing discussions with Grid and the UK government to address the issue and explore ways to reduce the delay."We are working with the UK government, the Grid and 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," he said while responding to a question on potential delays in commissioning the facility.He added that the company is evaluating options to shorten the delay but acknowledged that some slippage in timelines now appears unavoidable. "We are actively working to see if we can reduce it further, but there will be some imminent delays," Chatterjee said, without providing additional details.In May 2024, Tata Steel signed a connection offer agreement with the Electricity System Operator. Under the arrangement, Grid is responsible for building the electrical infrastructure required to power the 3.2 million-tonne electric arc furnace by the end of 2027.According to information shared by Tata Steel, the Energy System Operator (NESO) is a public body that oversees the connection process, including the connection contract with Tata Steel UK, and manages electricity grid operations across the UK.
The BriefWire