We expect Tata Steel Netherlands to be EBITDA positive next year: TV Narendran

The Netherlands never had a bleed, but last year was bad because one blast furnace was down. The Netherlands unit has always been EBITDA and cash positive since the acquisition. We expect next year we will go back to being EBITDA positive and hopefully cash positive. The UK is where we continuously bleed for most of the last 15 years. That is why the UK restructuring is very important to stop the bleeding. In the UK, it will take 18 months for the restructuring to be completed and that itself will help us stop the bleeding. Once the electric furnace comes we should be an EBITDA and cash positive.

The consultation process starts next week and has to go on for a minimum of 45 days. We are planning for the closure of one blast furnace in the June quarter and the second by this year-end. We are also discussing with Union on restructuring plan which impacts the jobs of 2,500 people in the next 18 months and another 300 after maybe three years. So these are the conversations with the unions over the next two months. In the next 18 months we will see through the restructuring which impacts 2,500 jobs.

Obviously, they are not okay and that is why there is noise, but the UK business has been bleeding for a long time which is clear to everyone. It was not sustainable and the support we are getting from the UK government is on the assumption that we will shift from the blast furnace process route to an electrical furnace because that is the best way to produce steel with a lower carbon footprint.

No. The grant is to support us in the transition to an electric arc furnace route. It is being given because we are reducing the carbon footprint by almost 5 million tonnes. So there is a justification for them to give us money because we are also helping them reduce the carbon footprint of industry. It is like any other government incentivising solar wind or electric vehicles. If you have a greener process route to make steel, governments in Europe not just the UK but also Germany, France and Spain are giving grants to help the industry in transition. We are also in conversation with the Dutch government for a similar plan in Netherlands.

We are looking at imports in the UK as a temporary arrangement till the electric car furnace comes up in two years. There are some restrictions but that is again a discussion with the government to allow us a reprieve till the electric arc furnace comes up. We will be importing substrates like slabs and coils to feed our downstream units to retain customers. In fact, the carbon footprint in the Netherlands is even lower than that of in UK. So to that extent, any material going from there will not have a disadvantage.

The contours and outline of the agreement have been finalised. The grant agreement is being negotiated and we also need to go through a consultation process before we can sign any definitive document. We have to engage with the unions and take their suggestions also on board which is what we are doing now.

In phase one, we will be closing down one blast furnace and shifting from a coke oven to a gas-based DRI and an electric arc furnace. The second phase involves gas-based DRI may reduce the electric furnace – a slightly different furnace. This conversation is going on with the Dutch government. We have not concluded yet because the Dutch government is also in a bit of a state of flux. They just had elections and the new government will come into place in the next few months. Then we can take our conversations to a conclusion.

The plant there is in a much better shape there. We have two blast furnaces in Netherlands. We are relining blast furnace-I which will start next week. So that is good to go for at least 10 years. The second is due for releining by 2027-28, so before that, we would have concluded with the Dutch government. That is a good time to take it down if not earlier.

That is not something we are sharing just now because that is being discussed with the Dutch government and once we have reached a certain stage like we did with the UK government then we will announce the details.

We will take that call. It is too early for us to comment. There is already a restructuring going on in the Netherlands which was announced two months back. There were about 800 job reductions already going on there but that will not be suffice. Eventually, during the transition we will discuss on it at that time.