Tata Steel UK has initiated the construction of its new electric arc furnace (EAF) facility in Port Talbot, Wales, marking a significant step in its green transformation journey.

The EAF facility, which represents a £1.25bn ($1.68bn) investment in low-carbon steelmaking, has garnered support from the UK's government with a £500m contribution.

The Port Talbot EAF is expected to be commissioned by the end of 2027 and aims to reduce carbon dioxide (CO₂) emissions by about 90%, which equates to a reduction of five million tonnes of CO₂ annually.

This initiative is anticipated to support 5,000 jobs in the UK.

With a production capacity of three million tonnes of steel per year, the Port Talbot EAF will be one of the largest globally, primarily using domestically sourced scrap steel, the company said.

The project is part of the broader decarbonisation strategy of Tata Steel UK, and it includes the addition of new ladle metallurgy facilities, infrastructure enhancements, and collaborations with technology leaders such as Tenova, ABB, and Clecim.

Tata Steel chair Natarajan Chandrasekaran said: “This is an important day for Tata Group, Tata Steel and for the UK. Today’s ground-breaking marks not just the beginning of a new electric arc furnace, but a new era for sustainable manufacturing in Britain.

"At Port Talbot, we are building the foundations of a cleaner, greener future, supporting jobs, driving innovation, and demonstrating our commitment to responsible industry leadership. This project is also part of Tata Group’s wider investment in the UK, across steel, automotive, and technology among others, which reflects our deep and enduring partnership with this country."

Sir Robert McAlpine leads the construction, with contributions from Darlow Lloyd & Sons, Mii, Skelton Thomas, Wernick Buildings, Andrew Scott, and Systems Group.

UK Secretary of State for Wales Jo Stevens said: "The UK government acted decisively to ensure that steelmaking in Port Talbot will continue for generations to come, backing Tata Steel with £500m to secure its future in the town, along with £80m to support workers and the wider community. Our Steel Strategy will also deliver £2.5bn of investment to rebuild the UK industry, maintain jobs and drive growth.

“The construction of Tata's new furnace realises the promise we made to the community, while the development of floating offshore wind, plans for a Celtic Freeport and millions more for local regeneration all mean that Port Talbot has a bright future.”