Energy savings large enough to power two thirds of the homes in a town the size of Stocksbridge, improved efficiency and new routes into higher value markets will be the dividend Tata Steel reaps from its £4.5 million investment in its South Yorkshire special steels operations.
The additional funding brings the total the Indian-owned group has spent on local plants to £20 million – more than in any other year for the last decade.
What’s more, unlike previous investments, which were linked to major restructuring programmes that cost hundreds of jobs, the latest is designed to build the South Yorkshire business, now known as Tata Steel Speciality Steel, or TSSS.
Managing director Mark Broxholme sees the investment as a show of faith by the Indian steel giant after the Speciality Steels business’s return to profitability, following its successful drive up market.
“The business had not really been profitable for years. At best it broke even, but we have been profitable for the last 24 months and the new strategy is delivering results and support from our parent company,” says Mr Broxholme.
The biggest single investment was announced almost a year ago and has gone into installing new steel refining furnaces at the company’s Stocksbridge plant, which should start producing high integrity, high value steels for aerospace and other safety critical and technologically advanced applications in the new year.
That £6.5 million investment in two new vacuum arc remelting furnaces and specialist testing equipment will increase Tata Steel Speciality Steels’ capacity to make those types of steel by almost a third and is aimed at North American markets.
Since then, Tata Steel has agreed to spend a further £6.7 million on replacing and upgrading power systems and other infrastructure projects, including £2.5 million for a new electric arc furnace transformer and £2 million for a new gas main in Rotherham.
Mark Broxholme points out that the electric arc route is already more energy efficient than other steelmaking processes used in the UK, but says energy remains the business’s biggest worry.
“Of all the potential threats we see, the biggest is energy; in terms of security of supply, the cost of UK energy and international targets,” says Mr Broxholme. Everything else is on our own control. The UK is a great place to be – apart from its energy policy. The Government has to ensure there is a level playing field.”
Citing Germany as an example, Mr Broxholme says that while costs for heavy energy users appear higher than the UK, they fall well below British costs once German companies claim all the rebates they are entitled to – including rebates for agreeing to join voluntary schemes to reduce energy use which appear not to require them to actually achieve any reductions.
Tata Steel’s latest investments include:
A £2 million investment in new fume extraction equipment at its Aldwarke steelmaking facility which will cut energy bills by more than £600,000 million a year and reduce indirect CO2 emissions by nearly 5,000 tonnes.
A £1 million investment in state-of-the-art surface inspection equipment at the company’s Thrybergh Bar Mill, which will allow the company to make more technically-demanding and safety-critical products for the automotive industry.
A £1 million upgrade of a second ingot re-heating furnace at Stocksbridge, to improve energy efficiency, which follows a similar investment in the first furnace earlier this year. The latest upgrade will cut gas consumption by more than 10,000 mega watt hours every year, reducing CO2 emissions by 2,000 tonnes and saving the company £250,000 a year.
A £500,000 investment in the small bloom caster at Aldwarke, which will minimise breakdowns and result in increased efficiency.