Tata Sons India, the parent company of Tata Steel, is considering options to exit the latter’s steel business in the UK as hopes of receiving a £1.5 billion subsidy from the UK government recede, industry sources said on Monday, 17 October.

Tata Steel has requested a fiscal subsidy from the UK government to replace carbon-intensive blast furnaces with electric arc furnaces at its steel mills, but has not received a favorable response and is now considering various options for going out of business in the country, sources familiar with the developments said.

While there has been no official comment from the company, sources say that discussions about the need for subsidies have continued for more than two years, but it appears the British government led by Liz Truss is unwilling to offer such subsidies to replace the furnaces at Tata Steel’s Port Talbot steel mill which has capacity 5 million mt per year.

A spokesperson for Tata Steel, however, said in a media statement that the company is not currently in talks with any potential buyers for the Port Talbot plant.

Tata Steel is seeking two types of support from the UK government: first, support for the transition to green steel production and ensuring cost competitiveness at the same time, and, second, through partnerships in financing the project.

Industry analysts estimate such a transition for the Port Talbot plant would require around £3 billion in new investment, but without government financial assistance, the UK’s business portfolio does not justify Tata Steel’s infusion of such large sums, by itself.

Tata Steel’s CEO, TV Narendran, in a previous media interview stated, “There is justification for running the business given its current performance, but it doesn’t justify investing such large capital expenditures.”

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