Tata Steel’s 7-million-tonne-per-annum Netherlands steel plant seems to be facing fresh regulatory pressure in its decarbonisation journey, after Chairman N Chandrasekaran on Thursday said the “operating environment” in the country has become more “challenging” after environmental norms introduced in the country were tightened to levels significantly above European Union standards, potentially impacting compliance timelines for legacy blast furnace-based assets.
The development comes at a critical juncture for Tata Steel Nederland, which has staged a sharp operational recovery with EBITDA more than tripling to €267 million in FY26, even as the company navigates a complex transition towards low-carbon steel-making under its decarbonisation roadmap in Europe.
“The operating environment has become more challenging. The recent environmental regulations that have come up in the Netherlands are far exceeding the European Union standards. The emission norms have been tightened to levels where some of the legacy assets of Tata Steel Nederland will find it hard to meet the newly-established regulatory norms in the accepted timelines,” Chandrasekaran said at the company’s Annual General Meeting.
Sharp recovery
Despite the regulatory overhang, Tata Steel Nederland has delivered a sharp operational recovery after years of restructuring, with EBITDA rising to €267 million in FY26 from significantly lower levels in the previous year.
Chandrasekaran said the business is expected to improve further in the current fiscal year, with EBITDA projected at €400-500 million, supported by structural interventions undertaken over the past few years.
“We have been making a lot of structural interventions and this helped Nederland to triple the EBITDA over the previous year, though we have more ground to cover,” he said.
The long-term outlook remains strong, with the company targeting EBITDA of €800 million to €1 billion over time, subject to resolution of regulatory challenges.
The Tata Steel chairman said the company has initiated discussions with the Dutch government and regulators to work out a viable path forward amid the tightening regulatory landscape.
“Hopefully these things will get resolved during the course of this calendar year,” he added.
The decarbonisation plan for Tata Steel Nederland is centred on a phased transition to direct reduced iron (DRI) and electric arc furnace (EAF)-based steelmaking.
Public funding
According to the company’s FY26 annual report, the programme is backed by a joint letter of intent with the Dutch government and envisages conditional public funding of up to €2 billion. The transition roadmap includes the phased closure of one blast furnace and one coke and gas plant, along with investments aimed at improving environmental performance and long-term sustainability of operations at the IJmuiden plant.
To further strengthen the asset base, Tata Steel has also acquired Vattenfall’s cogeneration power plants in the Netherlands, Chandrasekaran said.
“Since the acquisition we have not funded Nederland. All their operations are being funded by the cash they generate. They have paid dividends over these years,” he said.
He added that the current EBITDA level of around €260 million reflects a significant improvement, with the company aiming to scale it up further to €400-500 million in the near term, subject to operating conditions.
While the Netherlands remains the most complex overseas market for Tata Steel from a regulatory standpoint, the company continues to pursue a broader European restructuring strategy, including a major transition in the United Kingdom.
“In the UK, the EBITDA losses were reduced by half than the previous year,” Chandrasekaran said.
Profitability target
The company has shut both blast furnaces at Port Talbot and is transitioning the site to a 3.2-MTPA electric arc furnace (EAF) facility, supported by the UK government. The £1.25-billion project, backed by a £500-million government grant, has begun construction and is expected to be completed over the next two to three years, with the company targeting profitability in the UK by FY29.
He said the transition marks a decisive shift away from legacy steelmaking in the UK towards a more sustainable and lower-emission production model. “For the Canada operations, a lot of work has been done to bring in efficiencies. But still it is loss making and we are trying to find a solution,” he said.
In contrast to the regulatory headwinds in Europe, Tata Steel highlighted continued strength in its domestic business, with India emerging as the key growth driver for the group. Domestic steel production rose 10.7 per cent to 168.4 million tonnes in calendar year 2025, while consumption increased 7.6 per cent to 163.7 million tonnes, supported by sustained demand from infrastructure, construction, automotive and broader industrial manufacturing sectors.
Chairman N Chandrasekaran said this momentum is expected to continue, driven by structural growth in end-use industries.
Expansion on track
“The domestic steel consumption will continue to grow because of the growth in automobile, defence, construction, etc,” he said. The company said it remains on track to expand its steel-making capacity in India towards 40 million tonnes, as part of its long-term growth strategy. Reflecting this outlook, Tata Steel plans to step up capital expenditure to around ₹20,000 crore in FY27, up from ₹14,559 crore spent in FY26, with nearly 60 per cent of the investment earmarked for India.
The company recently commissioned a 5-MTPA blast furnace at Kalinganagar, taking the integrated steel complex’s capacity to 8 MTPA, and also inaugurated a 0.75-MTPA scrap-based electric arc furnace in Ludhiana, marking the first in a series of modular, circular steelmaking units aimed at building a greener steel portfolio.
Chandrasekaran said the shift towards greener steel will be gradual but inevitable, adding that demand for low-carbon steel is expected to rise over time as market forces evolve.