MUMBAI: It could well turn out to be a windfall gain for Tata Steel in the UK. With the loss-making operations of Tata Steel Europe still reeling under a significant demand slump and a $1.6-billion goodwill impairment hit, the company is awaiting the final verdict for a large renewable energy development project which could as per some estimates even spur additional demand of a million tonnes of steel annually.
Developed by Able UK, the £450-million Marine Energy Park (AMEP) project is expected to kick-start the economic potential of the Humber estuary by this summer. The 800-acre development with quayside facilities - the largest wind farm in Europe - would manufacture, assemble and supply turbines for the massive offshore wind energy programme that the UK government has initiated. Incidentally, Tata is the only steelworks company in the Humber region, located in the eastern part of northern England.
"The £100-billion offshore wind programme is the largest engineering project in the history of the UK. It represents a massive opportunity for Tata Steel and the Scunthorpe plant in particular. And it is located so close to the Humber bank and offshore wind farm North Sea zones," said Marcus Walker, director of planning and regeneration at North Lincolnshire Council, in an interview to ET. "The Able Marine Energy Park is set to require around 1 million tonnes of steel a year - a massive boost to the steelworks," he added.
"This is a once in a lifetime opportunity for the area. The renewable sector could provide the economic renaissance for the region," added Martin Vickers, a local Member of parliament, who represents the area in which the port is to be built and is also a part of the government that will finally be expected to clear the project in July.
Scunthorpe is the hub for Tata Steel's long products in the UK that are typically used for construction and railways. Naturally, the company sees mega opportunities arising from this marquee venture. The benefits for the Tatas could first arise during the project construction stage where long products could be handy for the port development, railway linkages and other build-outs. Secondly, during the actual manufacturing, assembly and supply of the wind turbines, the Tatas are eyeing major contracts to supply speciality steel.
"For the last few years at Scunthorpe and Hartlepool facilities, we have been focussing specifically to cater to the growing needs of the offshore segment. This is part of our endeavour to supply value-added speciality steel to industry," said an official in the know who did not wish to be identified.
However, Tata Steel officials refused to put a specific number on the likely incremental sales volumes, saying these are all guesstimates at this juncture. Currently, the company sells close to 14 million tonnes of steel in Europe from its UK and Dutch plants.
"The renewable energy sector is of great interest and potential for Tata Steel. However, it would be inappropriate to comment further at this point on such a specific matter until there is some concrete news to announce," said a spokesperson from Tata Steel's external agency Rediffusion.
Other than Able UK, Tatas are also evaluating two smaller projects that are coming up in the region, including one in Scotland. The Greenport Hull - involving the regeneration of an existing dock - is backed by Siemens and Associated British Ports is also close to Tata's steel works.
"The Hull project is just 10 miles from the Able UK site. We see potential benefits from all three," said another official on condition of anonymity.