Hans van den Berg, CEO of Tata Steel Nederland: “Power plants of Vattenfall and its predecessors have been a logical combination with our steel production process for almost a century. The plants are unique because, unlike any other power plant in the Netherlands, they are fuelled by the residual gases from our steel production process. With the current contract expiring at the end of 2025, this is the moment to change ownership: By owning the power plants, Tata Steel Nederland will be able to manage the complex, step-wise transition from its existing steelmaking process to a low carbon, green steel operation. Therefore, this transfer of ownership is a significant and tangible step in Tata Steel Nederland’s transition to green steel.” 

Alexander van Ofwegen, Senior Vice President and Head of Business Area’s Customers & Solutions and Heat of Vattenfall: “Vattenfall supports Tata Steel's ambition to transition to more sustainable steel production. In this transition, these gas power plants in Velsen are still needed.This agreement is therefore a win-win situation. For the employees of the plants as the work will continue under similar employment conditions and a win for Tata Steel in gaining more control over the entire chain in the transition to low carbon steel making.” 

Vattenfall power plants in IJmond region 

The Vattenfall power plants in the IJmond region consist of three units. The power plants 24 and 25 in Velsen-Noord generate electricity predominantly from the residual gases from the steel production process. This electricity is used by TSN in its operational processes.  

The third unit is IJmond 01, a combined heat and power plant on the Tata Steel site in IJmuiden. This unit is fuelled by the residual gases from the steel production process and it produces electricity and steam. This electricity and steam are also used in the steel plant's operational processes. The three units employ approximately 116 employees. 

Advice of works councils, approval regulatory authorities 

The works councils of both Vattenfall and TSN have issued their advice to the transaction. Regulatory authorities, among which the Netherlands Authority for Consumers and Markets (ACM), have approved the change of ownership of the power plants. Ownership of the plants will transfer to TSN on January 1, 2026. 

The JLoI sets out the aims and objectives of the parties but is neither binding on the execution of the Projects or the Subsidy, nor with respect to any of the other commitments made herein by any of the Parties, with the exception of the commitment of the Parties on good faith negotiations towards a tailor-made agreement including the commitments related specifically to the period prior to the tailor-made agreement. Both parties will continue working towards the final tailor-made agreement in the coming months including after the elections and the formation of the new government in the Netherlands. The final investment decision will be considered by the Tata Steel Board in the process to come to the final binding tailor-made agreement. 

Mr. T V Narendran, CEO & Managing Director, Tata Steel and Chairman of the Supervisory Board of Tata Steel Nederland: “We would like to thank Minister Hermans, her colleagues in the Cabinet and the team from the Dutch Government and from the province of North-Holland who have engaged constructively and painstakingly with us over the last 2 years to complete this first step in our journey towards creating a sustainable long-term future for Tata Steel Nederland.

There are a lot of issues to resolve and work to be done before us. This includes work we have to do internally, including the completion of the engineering preparedness for this very complex transition & addressing statutory and regulatory aspects related to the coke and gas plants. It also involves external issues including satisfactory resolution of critical policy matters impacting the investment case, obtaining permits for the projects, and agreeing on detailed terms in the binding agreement, before we can consider proceeding towards the investment decision. We are also closely monitoring the policy developments in EU on CBAM and in the Dutch Parliament regarding the challenges of the 2030 CO2 reduction targets. In parallel, we are also looking at prioritisation, optimisation and sequencing of the capex spend such that it is affordable for all stakeholders. 

We are committed to working with all stakeholders including the government on resolving these points before the finalisation of the tailor-made agreement. The size and scale of the project is very large, and we are working to ensure that Tata Steel Nederland is ready for it, by improving its financial and operating performance and restoring it to its position as one of the most competitive steel making sites in Europe. Our Unions have supported this transition project and their continued support is essential to secure a robust sustainable future for TSN. We also want to assure our customers that our transition plans are based on ensuring an uninterrupted supply chain across our product portfolio.”

Through the first phase of the Integrated Health measures and Decarbonisation Project, TSN aims to achieve the following: 

- TSN aims to de-commission the existing Blast Furnace #7 and Coke and Gas Plant 2 and construct a DRP intended to initially be operational on natural gas and an EAF with increased scrap-intake. This would reduce annual scope 1 CO2 emissions by 5.4 Mta relative to the asis maximum of 12.6 Mta. Subsequently, Carbon Capture and Storage will be added to the DRP to further reduce TSN's annual scope 1 CO2 emissions by 0.6 Mta. Finally, biomethane and/or hydrogen will be used when economically available at scale, to further reduce TSN's annual scope 1 CO2 emissions by 1.2 Mta on phased basis (all subject to margins of uncertainty). 

- In order to improve the healthy living environment, and reduce its contribution to coarse and fine dust (PM10) immissions, annual emissions of individual substances of very high concern – NOx emissions, SO2 emissions, odour emissions and noise, TSN aims to undertake specific beyond-legal measures, beyond the de-carbonisation of its assets. TSN will cover the blending pile of the pellet plant, build a windbreak for the blending pile of the sinter plant, cover the iron ore yards, invest in dust reduction measures at slag processing facilities, and noise & odour reduction measures. These sub-projects are expected to have a shorter construction time and be delivered before the end of this decade. TSN will also cover the iron ore yards for the volume of ore needed for the new DRP-facility, and cover the steel slag cooling of the new EAF (to be completed at the same time as the respective installations). 

- TSN aims to implement new processing methods with the aim to improve the application of existing Basic Oxygen Steelmaking slag and future EAF slag. It also aims to increase its intake of scrap from 17% in 2019 to 30%, to improve circularity. 

Both parties have agreed, certain conditions as necessary to be completed / satisfied to arrive at the tailor-made agreement and the JLoI contains termination clauses for both Tata Steel and the Dutch government. For Tata Steel this includes policies relating to the national CO2 levy resulting in a significant cost to TSN; network tariffs significantly increasing relative to prevailing levels, indexed for inflation; and policies regarding steel slag affecting the business significantly in a negative way. For the Dutch government and for Tata Steel it is also essential that TSN adequately addresses all its legacy liabilities, in particular relating to the Coke and Gas Plants. The Parties have agreed to develop and finalise the project schedule in the tailor-made agreement. 

TSN has not yet completed the full engineering of the integrated project and therefore not finalised the total spend. The capital expenditure spend and phasing will be finalised at the stage of signing of the tailor-made agreement and at the point of making the final investment decision, and the project execution will also be spread over several years. The Dutch government intends to support up to €2 Billion under the JLoI. Additionally, TSN has made an application to the EU Innovation Fund for ~€0.3 Billion. The remaining amount is expected to be funded by a combination of the cash generated and contributed by Tata Steel Nederland, project financing debt, and funding procured by Tata Steel Limited over the period of project spend. 

For more information about the JLoI:

https://www.tatasteelnederland.com/en/sustainability/green-steel-plan/agreement

https://www.tatasteelnederland.com/sites/default/files/support-for-a-major-step-towards-cleaner-steel-production.pdf