New Delhi: Tata Steel is reportedly in discussions with a group of lenders, including Bank of America, HSBC Holdings, JPMorgan Chase, and Mitsubishi UFJ Financial Group, to raise around $400 million in green loans with a five-year tenure. If successful, this would be the company’s first green loan, and the proceeds would be used for its capital expenditure plans.
However, a spokesperson for Tata Steel stated that while the company is exploring the possibilities of green financing, there is nothing concrete, and the company remains focused on its deleveraging plan.
Tata Steel aims to be carbon neutral and has plans to produce green steel by 2030, which is steel made without using fossil fuels. The company intends to produce this type of steel at its Netherlands plant. The firm owns the UK’s largest steelworks, located in Port Talbot, South Wales, and had previously requested £1.5 billion from the UK government to support its decarbonization plans.
Tata Steel CEO & MD TV Narendran recently stated that the company will continue to invest Rs 10,000-13,000 crore annually to double its steel production to about 40 million tonnes per annum (mtpa) in India by 2030. The company currently produces around 20 mtpa of steel in India and aims to increase its downstream businesses, such as tubes and wires.
Under its plans to consolidate leadership in India, Tata Steel intends to increase its production of flats to 27 mtpa (from 16 mtpa), longs to 5 mtpa (from 13 mtpa), tubes to 2 mtpa (from 1 mtpa), wires to 1 mtpa (from 0.45 mtpa), and ductile iron pipes to 1 mtpa (from 0.2 mtpa).
Tata Steel also aims to reduce its net debt significantly, which stood at `71,706 crores as of December 2022, as capacity unwinds and steel margins improve.
Overall, Tata Steel’s plans to raise green loans and focus on its decarbonization plans are commendable. The company’s commitment to producing green steel by 2030 is a positive step towards reducing the carbon footprint of the steel industry. Additionally, its plans to increase its production and reduce its net debt are a testament to its long-term growth strategy. It will be interesting to see how Tata Steel progresses with its plans and continues to make a positive impact on the steel industry and the environment.
