No future for Tata Steel in the Netherlands, researchers say

The Netherlands is not a favorable location for Tata Steel to produce “green” steel in the future. Researchers Boris Schellekens and Rodrigo Fernandez of the Centre for Research on Multinational Corporations (SOMO) wrote in the economic magazine ESB. According to the researchers, companies like Tata Steel would be better off moving to locations where cheaper and more sustainable electricity can be generated, like Spain.

Currently, large amounts of coal are being burned to make steel. Sustainable electricity and hydrogen are used to make green steel. However, a lot of electricity is needed to make the production process of steel sustainable, the researchers said.

Because coal is relatively cheap and the production of sustainable electricity is relatively expensive, the share of energy prices in the total costs of steel production will increase from 20 to 50 percent when switching to green steel.

Because a high share of the manufacturing costs is energy, the location where energy is the cheapest will play a deciding factor in how competitive a company can be, the researchers believe.

To keep Tata Steel competitive in the Netherlands, according to researcher Schellekens, the government would also have to contribute 800 million euros annually for energy costs in addition to the greening subsidy of 3 billion euros. For that amount, the government could continue to pay almost all of Tata Steel’s salaries.

Schellekens thinks that Spain is a better place to produce green steel. In addition to a favorable location for sustainable energy generation, all factories in Spain are already electric.

They still run mainly on fossil energy but are already suitable for the production of green steel. In addition, Spain is already a forerunner in the field of sustainability, partly due to the presence of cheap solar and wind energy.

According to Schellekens, the Netherlands would be better off looking across the border for ways to reduce emissions. Thinking in this way could help The Netherlands avoid a repeat of the issues of years ago with the company RSV-shipyard, which were kept alive by subsidies for years.

The shipyard went bankrupt in 1983 because of cheap competition in foreign countries. Instead of repeating these mistakes by keeping Tata Steel, the Netherlands is recommended by Schellekens to focus on sustainability and employment with an independent future perspective in the industrial sector.