Tata Steel has signed a landmark agreement with National Grid Plc's Electricity System Operator to build the necessary power infrastructure to transition its Port Talbot site to a green steel project. This collaboration will enable the British grid operator to construct a new electrical framework capable of powering Tata Steel’s 3.2 million-ton electric arc furnace by the end of 2027.

Rajesh Nair, chief executive of Tata Steel UK, emphasized the significance of this development in a statement, noting, “This will help us replace our aging and carbon-intensive blast furnaces with a state-of-the-art electric arc furnace capable of producing our customers' most demanding steel products”.

The move comes after the UK government agreed last year to provide up to £500 million ($635 million) to support Tata Steel’s modernization of the country's largest steelworks, aiming to keep it operational. This subsidy is part of broader efforts to persuade major companies to maintain their presence in Britain.

In April, Tata Steel confirmed its commitment to invest £1.25 billion in constructing the electric arc furnace at Port Talbot following extensive negotiations with UK trade unions. These discussions were critical in addressing concerns over anticipated job losses, which have led to threats of industrial action. The new electric arc furnace, while significantly greener than traditional coal-fired furnaces, is also much less labor-intensive, leading Tata to project that 2,500 roles will be impacted over the next 18 months.

Industry minister Alan Mak welcomed the agreement, describing it as 'another positive step towards securing the future of steelmaking in South Wales and the UK'. The development highlights a pivotal shift towards sustainable steel production, ensuring that the industry aligns with modern environmental standards while addressing economic and labor concerns.