The government wants to help Tata Steel become more sustainable, but under certain conditions

• Rob Koster

  Economics reporter

Tata Steel Netherlands can receive help from the government to make the factory in IJmuiden more sustainable. The outgoing cabinet announced this today. The condition is that the steel factory does more in the coming years to combat nuisance and prevent health damage for local residents.

The former Royal Blast Furnaces now make steel from iron ore and coal. The company wants to switch half to gas – and later hydrogen – by 2030 and wants to recycle more scrap. Tata says it needs significant financial support from the government to achieve this sustainability.

The cabinet has looked at different options for the government’s involvement in the future of the steel factory in IJmuiden. Those five variants emerged from research from former minister Hans Wijers and banker Frans Blom.

Because the government considers it important to preserve the steel industry in the Netherlands and does not want to put 9,000 people on the street, Tata can receive government support. The company must then take additional measures as previously established in the report of the IJmond Health Expert Group.

This concerns, for example, the earlier closure of coke gas factory 2 and/or the accelerated covering of the storage of raw materials. This would reduce the nuisance to the environment, but it would put pressure on the steel factory’s revenue model. The company would then have to import more expensive coke instead of cheaper coal.

The steel factory is currently investing 300 million euros in nuisance control. For example, Tata has installed what it claims is the largest extraction system in the world at the steel factory. The factory is also building a meter-high wall between the company premises and the beach. It is unclear how additional measures should be financed and what the government’s role in this would be.

The Wijers and Blom report paints a positive picture of the future of Tata Steel, if it is able to become clean and sustainable. The researchers point out, among other things, its favorable location on the North Sea with its own seaport.

This location also provides access to sustainable electricity from wind farms in the North Sea. This allows green hydrogen to be produced. By doing this, especially when there is a surplus of electricity, Tata can help solve future problems on the electricity grid.

Furthermore, according to the researchers, Tata produces more efficiently than comparable factories elsewhere in Europe. The former Royal Blast Furnaces are in danger of falling behind now that France and Germany, among others, have already promised billions in support to their steel factories.

That is also the reason why the cabinet is starting negotiations with Tata despite the outgoing status. In addition, lawsuits from local residents against the steel company threaten the continuity of the company.

The intention of politicians in The Hague to help Tata with sustainability does not mean that it will succeed. It is not only additional environmental measures that will be a strict requirement for aid. Long-term guarantees will also be required from Indian owner Tata Steel Limited.

As the government invests more money in the steel mill, it will also want more control over the company’s affairs. And although the outgoing cabinet will start negotiations with Tata, the final decision-making will also have to be borne by the parties that are now negotiating a new cabinet.

How much money Tata needs from the government is unknown. Reports of an amount of a billion euros or more have been circulating for a long time, but this has never been formally confirmed. During the presentation of the Wijers report to the press, an overview was accidentally shown showing an investment of 0.5 to 2 billion euros.

While the steel factory in IJmuiden has mainly received mountains of criticism in recent years, there are now also more positive signals. Tata appears to be able to benefit from the growing realization in The Hague that retaining these types of large companies is important for the economic future of the Netherlands.

Moreover, closing the factory would force the government to undertake enormously expensive soil remediation before the site would be suitable for new residential areas, for example. Wijers’ presentation mentioned an amount of 12 billion euros.