Port Talbot Steel Plant Breaks Ground on £1.25bn Project to Slash Emissions by 85%

Work is officially underway on Tata Steel’s massive £1.25 billion electric arc furnace project at its Port Talbot site in Wales. The transformation promises to slash the site’s annual greenhouse gas emissions by a staggering 85 per cent. The complete revamp is expected to wrap up by the end of 2027.

To make room for the shift, both of the site’s traditional blast furnaces have now been shut down. In their place, Tata will install a single, state-of-the-art electric arc furnace capable of producing 3.2 million tonnes of steel annually.

The UK Government is backing the green steel vision with up to £500 million in grant funding, while Tata is covering the remainder of the costs.

First Minister for Wales, Eluned Morgan, said: “This is a momentous day for heavy industry in Wales, as the electric arc furnace has secured the long-term future of steel making at Port Talbot. Seeing spades in the ground today provides a tangible sign of Tata’s intention to continue producing steel in the area, an industry which has provided quality jobs to local people for generations.

“The start of the construction phase is good news for Port Talbot and neighbouring communities, and I’m especially pleased that Tata has committed to employing local contractors and local workers where it can.”

The project has already secured a grid connection, paving the way for the new furnace to begin turning scrap metal into high-quality steel. Most of that scrap — around 75 per cent- will be sourced from within the UK. That’s a significant jump from the current 10 per cent, and a substantial step toward building a more circular, self-sufficient steel economy.

By switching to electric arc furnace technology, Tata estimates it will prevent around 50 million tonnes of emissions over the next decade. The UK Government sees even wider benefits, projecting a 7 per cent drop in emissions across all British business and industry, a 22 per cent reduction for Wales, and an 85 per cent cut for Port Talbot itself.

According to the Government, the construction phase alone has created around 5,000 jobs. But it’s not all smooth sailing. Trade unions have warned that the shift to electric steelmaking could result in up to 2,800 net job losses across operations and supply chains once the new system is fully implemented.

To help cushion the blow, more than 50 companies have stepped forward to support displaced workers, while the Government has pledged £80 million in transition assistance for affected communities.

Secretary of State for Wales Jo Stevens said: “The UK Government acted decisively to ensure that steelmaking in Port Talbot will continue for generations to come, backing Tata Steel with £500m to secure its future in the town, along with £80 million to support workers and the wider community.

“Our Steel Strategy will also deliver £2.5bn of investment to rebuild the UK industry, maintain jobs and drive growth.

“The construction of Tata’s new furnace realises the promise we made to the community, while the development of floating offshore wind, plans for a Celtic Freeport, and millions more for local regeneration all mean that Port Talbot has a bright future.”

This announcement closely follows the release of the UK’s long-awaited 10-year Industrial Strategy. Designed to avoid the stop-start nature of past infrastructure investments, the strategy aims to bring consistency and direction to the British manufacturing sector.

Developed with input from industry leaders, investors, unions, and environmental groups, the strategy had been delayed but is receiving positive reactions across the green economy. One notable commitment is to reduce energy costs for businesses by 25% by 2027. Over 7,000 energy-intensive companies are set to receive exemptions from green and social levies. This move addresses long-standing concerns that high electricity costs have been stifling UK industry competitiveness.