Tata Steel has approached the UK government for a fresh multimillion-pound funding package as delays to the transformation of its Port Talbot steel plant threaten to push up project costs and deepen pressure on Britain's crisis-hit steel industry, Sky News reported.
The company approached the Department for Business, Innovation, Science and Technology (DBIST) in recent weeks to discuss additional government support, according to the report.
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The request comes on top of a £500 million government grant awarded to Tata Steel in 2023 as part of a £1.25 billion investment to build an electric arc furnace (EAF) at Port Talbot, one of Britain's largest and most important steelmaking sites.
The new furnace was originally expected to become operational by early 2028, within three years of construction beginning. However, delays to the site's grid connection have pushed the expected commissioning date to late 2028 or early 2029.
Tata Steel is understood to have calculated that the delay, combined with rising project costs and sales foregone while the new furnace remains unavailable, could significantly increase the overall cost of the transformation.
The precise amount of additional funding sought from the UK government was unclear, although industry sources cited by Sky News said the request was likely to run into hundreds of millions of pounds. Business Secretary Jonathan Reynolds has been briefed on the company's approach, the sources said.
The Port Talbot project was designed to preserve steelmaking in Britain and around 5,000 jobs across the UK. However, about 2,500 positions have already been lost as part of the transition.
The plant's final blast furnace was shut down in 2024, marking the end of traditional blast-furnace steelmaking at the site.
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Tata Steel has for years warned about the viability of its UK operations, with the future of Port Talbot repeatedly coming under pressure. The company has also faced growing competition from cheaper imported steel.
One of its senior executives warned late last year that Britain had become "an unfairly priced dumping ground for cheap imports".
Earlier this year, Tata Steel was reported to be considering mothballing its UK steel mills as losses increased.
Union leaders have also raised concerns over competitive pressures on Tata Steel's UK operations. In particular, they have pointed to larger-than-expected quotas for Indian steel imports under the UK-India free trade agreement signed earlier this year.
Imports from Vietnam and South Korea have also added to pricing pressure on galvanised steel produced by Tata Steel.
The company has positioned its £1.25 billion Port Talbot investment as a way to preserve large-scale steel production in Britain while shifting towards lower-emission production.
When the public-private funding package was formally confirmed in 2023, Tata Steel chief executive T V Narendran said: "With the UK government's critical support, this complex and ambitious transformation of Port Talbot has the potential to make the plant one of Europe's premier centres for green steelmaking.
"We now look forward to the efficient and speedy execution of the EAF project.
"We will also continue our work with the Transition Board and the UK and Welsh governments to enable this project to be a catalyst for economic regeneration and job creation in South Wales."
Any additional public funding for Tata Steel is likely to renew scrutiny of the UK government's approach to the country's steel industry and wider industrial policy.
The company is part of Tata Group, which also owns Jaguar Land Rover. JLR announced earlier this month that it would cut 4,000 jobs as part of a restructuring programme aimed at saving £1.7 billion.
The latest development comes as Britain's steel industry faces broader financial and operational challenges.
British Steel, the country's second-largest steelmaker, was nationalised by the government during the summer after its previous Chinese owner, Jingye Group, threatened to close its blast furnaces at Scunthorpe. The government has since faced criticism from MPs over the absence of what they described as a "credible plan" for the company's long-term financial sustainability.
British Steel is costing taxpayers around £1.3 million a day to keep afloat.
Reynolds has also said he would work towards the public acquisition of Speciality Steel UK, just over a year after the country's third-largest producer entered insolvency proceedings.
