Cabinet sees a future for Tata Steel in the Netherlands, as much as 2 billion is needed for greening

Tata Steel may need a subsidy of 2 billion euros to realize its greening plans until 2030, and accelerated sustainability may add another 50 percent to this. This became apparent during the presentation of the advice of former minister Hans Wijers and Frans Blom of consultancy firm BCG to the cabinet. The amounts mentioned do not appear in the public report, but were mentioned in a presentation to the press, including BNR. Until now, the government contribution that Tata Steel needs has been shrouded in mystery.

Health risks must be reduced in the short term, Adriaansens and Heijnen write in a letter to the House of Representatives. Moreover, Tata Steel Netherlands (TSN) can only remain competitive in a sustainable way if the government can guarantee sufficient cheap green energy. The government must therefore provide financial support, just as in other countries, to make greening production possible, Wijers and Blom advise in their report How to make Tata Steel more sustainable.

At the request of Adriaansens, the two authors of the report have listed five future scenarios for the Tata Steel branch in IJmuiden. With a view to preserving jobs and strategic autonomy, among other things, they argue for the maintenance of steel production in IJmuiden. “Control over the steel supply chain through production and reuse is of strategic importance for Europe,” the report states.

Five scenarios

The five scenarios vary from no tailor-made agreements to the closure of the Tata Steel branch in IJmuiden. But according to Wijers and Blom, these two extreme options are far from ideal: continuing as usual affects social support and closure costs jobs and entails large public financial costs. The other three options involve varying degrees of greening.

Adriaansens told reporter Mats Akkerman that it is ‘a positive choice’, in which green, clean and sustainable steel are central and local residents and their health are taken into account. “If that’s possible, then that’s something we need to work on.” It is estimated that the sustainability drive will cost 0.5 to 2 billion euros, and the accelerated variant may cost 3 billion euros. But Adriaansens is still holding off that boat. ‘At this stage I am not yet ready for the posts, we still have so many steps to take first.’

Mandate for negotiations

Adriaansens points out that these are only very rough estimates by the two advisors. She now first wants to see what the possibilities are to enter a healthy future with Tata Steel. Only then will she make a further choice with the cabinet, to create a ‘mandate for further negotiations’. ‘Then we will see what is possible and then the variant outlined, with which you achieve faster health results, is my preference.’

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One of those variants includes a plan that TSN recently presented, in which the closure of a blast furnace and a polluting coke factory by 2030 is the starting point. These would be replaced by new installations that can produce steel ‘greener’. In addition, there are two variants in which sustainability progresses faster. In all scenarios, the government must step in to keep TSN competitive compared to other steel giants.

Decisions about Tata’s future

In the advice from Wijers and Blom, Tata Steel’s location by the sea is mentioned as an important condition for continued competition with other European steel producers. It is important to make short-term decisions about the future of the steel group. Hurry is needed with greening, to prevent the competitive position from coming under further pressure.

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According to Wijers and Blom, persistent uncertainty leads to unrest within the company, among local residents and other stakeholders. The social acceptance of steel production in IJmuiden may suffer as a result. Elsewhere in Europe, government support is already on the agenda for at least ten steel factories. Plans to significantly reduce CO2 emissions by making factories greener are already well under development. “They are therefore ahead of TSN in this regard,” the report states.