Tata Steel seeks new government funding as industry crisis deepens

The UK's biggest steel company is seeking fresh government funding amid delays to the transformation of its plant in Port Talbot - a request which threatens to cast a deeper shadow over Britain's crisis-hit manufacturing sector.

Sky News has learnt that Tata Steel approached the Department for Business, Innovation, Science and Technology (DBIST) in recent weeks to discuss a new multimillion-pound support package.

The request is in addition to a £500m grant awarded to Tata Steel in 2023 to build an electric arc furnace (EAF) at Port Talbot, one of Britain's most important manufacturing sites.

That government aid formed part of a £1.25bn investment in the site which was supposed to have the new EAF operational by early 2028 - within three years of construction getting under way.

The plan was aimed at preserving 5,000 steelmaking jobs across the UK, although 2,500 roles have already been lost as part of the transition.

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The last of Port Talbot's blast furnaces closed in 2024.

However, delays to the grid connection timetable have left Tata Steel to conclude that the new EAF will now not be up and running until late 2028 or early 2029.

The company is said to have calculated that rising costs associated with the project, as well as foregone sales caused by the delay to the EAF, would cause a significant escalation in its overall cost.

The precise sum of additional funding that Tata Steel is now seeking from Whitehall was unclear this weekend, although industry sources said it was likely to run to hundreds of millions of pounds.

Jonathan Reynolds, the business secretary, has been briefed on the approach from Tata Steel, they added.

Tata Steel has warned for years about the viability of Port Talbot, with repeated threats of closure hanging over the plant during the last decade.

The company has been hammered by a glut of cheap steel arriving in the UK, with one of its senior executives warning late last year that Britain had become "an unfairly priced dumping ground for cheap imports".

Earlier this year, it was reported that the company was considering mothballing its UK steel mills amid rising losses.

Union leaders said over the summer that Tata Steel's Llanwern plant in Newport, South Wales, was particularly at risk from larger-than-expected quotas allotted to India by the government alongside the free trade agreement struck by the two countries earlier this year.

Imports from Vietnam and South Korea have also intensified the pricing pressure on galvanised steel produced by Tata Steel.

Tata Steel has attempted to use the £1.25bn investment in Port Talbot as a move to preserve mass steel production in Britain.

When the public-private funding package was formally confirmed two years ago, T V Narendran, Tata Steel's chief executive, 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."

The prospect of more public money being used to back Tata Steel is likely to raise questions about the industrial priorities of Andy Burnham's government.

Tata Steel is part of the same Indian conglomerate as Jaguar Land Rover, which announced earlier this month that it was cutting 4,000 jobs as part of a reorganisation aimed at saving £1.7bn.

The parent company, Tata Group, is embroiled in a boardroom governance dispute which has rocked corporate India and left its subsidiaries uncertain about the group's future leadership.

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The latest talks come amid a wider crisis which has seen Britain's biggest steelmakers put on life support by the government.

British Steel, the second-biggest player in the industry, was nationalised during the summer using legislation passed by parliament after threats by the company's previous Chinese owner, Jingye Group, to close its blast furnaces at Scunthorpe.

This week, however, the government was criticised by MPs for failing to develop a "credible plan" for the company's future financial sustainability.

British Steel is costing taxpayers £1.3m a day to keep afloat.

That criticism came in the same week that Mr Reynolds said he would work towards the public acquisition of Speciality Steel UK just over a year after the country's third-biggest producer collapsed into insolvency proceedings.

Tata Steel and the Department for Business both declined to comment on the latest talks.

(c) Sky News 2026: Tata Steel seeks new government funding as industry crisis deepens