TATA Steel has reached an agreement with the National grid to start supplying energy for new furnaces in South Wales.

The company confirmed that it has secured a grid connection offer from the Electricity System Operator (ESO) in a huge milestone for the Port Talbot steelworks.

The agreement will involve National Grid building a new electrical infrastructure, which is capable of powering the 3.2 million-tonne furnace by the end of 2027.

Tata Steel UK’s CEO, Rajesh Nair, said: “I’m delighted we’ve signed this connection agreement with the ESO.

“This is a critical milestone in transforming our steelmaking operations in Port Talbot. This will help us replace our ageing and carbon-intensive blast furnaces with a state-of-the-art electric arc furnace capable of producing our customer's most demanding steel products.”

After seven months of discussions with unions, Tata revealed last month it is proceeding with plans to shut down two blast furnaces and invest £1.25 billion in an electric arc furnace on its Port Talbot site.

The move will see thousands of jobs lost, with the new furnace needing fewer workers to maintain.

It has been confirmed that Tata has advanced the engineering of the transformation of its Port Talbot steelworks and expects to place equipment orders for the electric arc furnace by September 2024.

It is expected to start construction of the project by August 2025.

Industry Minister Alan Mak said: “This is another positive step towards securing the future of steelmaking in South Wales and the UK, and I'm pleased to see Tata Steel reach this milestone.

“Our support for the steel industry is unwavering, and our historic investment alongside our grid capabilities means we can look ahead to cleaner, greener steel production in years to come.

“Accelerating grid connection timescales is a top priority for the government and we are working closely with Ofgem and the network companies to transform the electricity network at a scale and pace not seen for decades.”

Rajesh added: “Having access to higher-power electricity is a foundation stone for greener steelmaking, regardless of the technology choice.

“That’s why we’ve been working closely with the ESO and National Grid for a number of years on how to strengthen our power infrastructure.

“This agreement means we will have sufficient power for our new electric arc furnace and the capability in the longer term to further strengthen our business.”