Studying impact of Trump tariffs on our Europe ops, need policy intervention in India to promote greener steel-making: TV Narendran

It has an impact on European business. We sell about a million tonnes of steel from Europe to the USA. But a lot of those teams are not made in the US. We have some exemptions, at least from the next few months. 

Our customers there (in the US) want us to supply the metal, because they don’t have an option to buy it locally. Customers there cover sectors like automobiles and packaging. And in packaging, a lot of that steel is not made in the US. So, somewhere that’s a call which we would like to take with our customers there. 

Hopefully, over the next few months, we will have some clarity on the nature of these tariffs – whether they are permanent or temporary.

The journey to profitability is ongoing. We have closed the heavy-end and are currently sending substrate from India and the Netherlands to the UK for finishing. These measures, along with the structural changes we are implementing in the UK, should help us deliver better numbers over the next few quarters.

The next part, the EAF (electric arc furnace) planning permissions have just come some days back. And there will be some more conditions that we will have to fulfil. We hope that the construction will start by June. The orders have been placed already for the furnace. By the end of 2027, we should have the furnace up and running. We are sticking to the timeline for the UK. 

For the Netherlands, we are currently in conversation with the government on a proposal; once we have an agreement on the proposal, then we will be ready with the transition plan. 

No, it is similar to the UK plant and plans are similar. It is about closing the blast furnaces. We plan to close one blast furnace by 2030 and the second by 2035; and build an EAF and a gas-based DRI unit.

In the Netherlands, we have not yet stated a timeline because the conversation with the government is not yet complete. Till we know what is the funding support (that) we cannot get from the government.

We’ve always said that Tata Steel will reduce debt by roughly a billion dollars a year, and we did so for three years. However, in the last couple of years, we struggled due to our (investment) plans and the fall in steel prices. What we have always said that we want a net debt-to-EBITDA to be below 2.5. Today, it is all 3.3 or so. So, it is on the higher side. But I think now that the Kalinganagar expansion is complete, we will start generating earnings. Hopefully, with some support of the (improved) steel prices – today at much lower levels than normal, things will improve. 

But for FY26, we will continue to pursue the $1 billion debt reduction target. 

So, the EAF that we are building in Ludhiana will have a lower CO2 emission at 0.3 levels. Our whole direction of building EAF – based steel is to have greener steel, which have lower emissions. 

When you look at CO2 emissions in steel-making through the blast furnaces then typically, the benchmark in the world is our plant in the Netherlands, which (emissions) is at 1.8 levels. 

So, 2.2 itself is a tough number to achieve when you have an integrated steel plant making the alloy using iron ore and coal. However, if you use gas or you go in for recycling, then you can easily come below 2.2 or even below 1.8.

Carbon credits are very important because today apart from the star rating, there is no incentive to produce greener steel. Even for us, different sites have different carbon footprints – Jamshedpur at 2.2 and others could be at 2.6 or 2.8. But there is no benefit that we get for Jamshedpur for others. I think if you look at what’s happening in Europe, there is a policy framework which allows and incentivises efficiencies. There is a market pull for greener products. Customers are willing to pay more. 

The star rating is a good example of how you incentivise from this market side. So I think they (the Government) need to be incentivised from the supply side as well as from the market side. 

If you look at any other industry which is transitioning to green, whether it’s the automobile industry or power sector there are incentives. 

We’ve been talking to the government to say have a Europe-like structure – which has a policy frame and a market which incentivises this transition. Then the industry is able to make the transition. Otherwise it costs more to produce green steel. It has a direct hit on profitability.

The steel industry has been one of the biggest private sector investors over the last few years here in the country. And I think all players announced big expansion plans. One round of expansions are getting completed, and the question is: is there a viable investment if steel prices stay the way they are? And I think that’s been a point with the government. 

If steel prices stay the way they are and in the context of what’s happening globally, with a lot of steel which can’t find other markets end up in India and different prices here to levels at which the steel company struggle to have healthy cash flows; then at some point in time, future investments can get impacted. 

I think that has been our submission to the government and I think the government has heard us and hopefully they will be some action. We are waiting for that.