Plans need to be cleared by the Tata Steel board and by the Dutch government, those in the know said.  

Tata Steel plans to phase out a major blast furnace at its IJmuiden plant in the Netherlands as part of its ambitious decarbonisation drive. The company will replace coal-based production with a Direct Reduced Iron (DRI) plant and Electric Arc Furnace (EAF) setup under its Heracless project, sources in the know said.

The nearly €1.5-billion overhaul proposed, involves shutting down Blast Furnace 7 and Coke and Gas Plant 2, targeting a cut of 5 million tonnes of CO₂ emissions annually by 2030. Operations will begin on natural gas, but the site is being prepared to switch to hydrogen as supply infrastructure ramps up, sources said.

Tata Steel has proposed tying-up with the Netherlands’ HNS hydrogen network once ready.

Plans need to be cleared by the Tata Steel board and by the Dutch government, those in the know said.

Tata Steel is yet to respond to queries by businessline.

Funding & cash flows

In its FY25 annual report, the company said, in the Netherlands, concerns over noise, dust, and emissions near manufacturing facilities have increased pressure to implement decarbonisation and social impact programmes.

“Tata Steel Europe Ltd, a wholly owned step-down subsidiary of the company, is undertaking a transition towards de-carbonised operations and away from the current blast furnace-based production processes across both the UK and Netherlands businesses which would affect the estimates of its future cash flow projections,” it said in the annual report.

The technology transition and investments are dependent on financial and policy support of the local governments in the country of operation, as well as an overall regulatory regime which incentivises reduction of CO2 emissions in Europe, it further said.

Management’s assessment is that generally, these potential carbon reduction-related costs would be compensated by a combination of higher steel prices or through public spending or subsidies, it added.

During the year under review, liquid steel production from European operations – UK and Netherlands – was 7.82 million tonnes (previous year: 7.80 mt), which was at par against the previous year. Deliveries from European operations increased by around 4 per cent to 7.97 mt.

The turnover at Rs 76,416 crore (previous year: ₹78,144 crore) was marginally lower owing to reduction in average revenue per tonne partly offset by increase in deliveries.

The EBITDA losses from European operations stood at ₹3,327 crore, almost halving over previous year losses being ₹7,612 crore. The improvement in EBITDA was seen primarily in the Netherlands as the previous year was impacted by Blast Furnace 6 reline till the later part of the year and other restructuring measures.

Under discussion

Market intelligence firm, BigMint, in a recent report said, Tata Steel opted to decommission the larger BF7 over BF6 to maximise emissions reduction. The latter, having recently undergone an overhaul and fitted with environmental controls, will continue to operate.

The DRI plant will convert iron using natural gas, initially; and later transition to 80 per cen hydrogen-based reduction method.

Tata Steel Nederlands operated at rated capacity leading to liquid steel production of 6.75 million tonnes in FY25 and higher by 40 per cent year-on-year. It is expected to be around similar levels once the plant moves to the new setup.

Scrap usage is likely to rise, improving circularity in steelmaking, BigMint said in its report.

Published on July 16, 2025