Steel Industry: Wales

Debate between Beth Winter and Nusrat Ghani

Wednesday 21st February 2024 Westminster Hall

[Ms Ghani]

I will make some progress before I take any further interventions. If the hon. Lady paid more attention to the business model, she would know that we cannot use more scrap steel in the UK economy because we do not have the capacity. But we will with the electric arc furnaces, which will be the dynamic change that is definitely needed.

Furthermore, by reducing our reliance on raw materials such as iron ore and coking coal, electric arc furnace technology offers a more sustainable alternative. Unlike blast furnaces, electric arc furnaces use scrap materials that are readily available—as I said, we have around 11 million tonnes circulating—from abundant domestic sources in the UK. In fact, the UK ranks among the top exporters of steel scrap globally, second only to the United States. Leveraging our ample supply of steel scrap for electric arc furnace production enables us to create new steel products locally, supporting British and international manufacturers alike. Every tonne of steel scrap that is sourced domestically diminishes our dependence on raw material imports from overseas countries, none of them near neighbours.

Wider support for the steel industry was raised in the debate. More widely, we are backing UK-made steel and, crucially, we are backing it in the right way, investing hundreds of millions of pounds to help the industry to thrive in increasingly challenging global markets. We are launching initiatives such as the British industry supercharger, which reduces electricity costs for the steel industry and other energy-intensive sectors, bringing them closer in line with the charges of other major economies. That is complemented by the £730 million in energy cost relief given to the steel sector since 2013. We have given specific support through our energy bill relief scheme and energy bills discount scheme.

We are, then, ensuring the resilience and prosperity of the UK steel industry in the face of increasingly competitive global markets. This work is preparing UK steelmaking for the coming years, but it is not the final word in future-proofing the industry. The SUSTAIN future manufacturing research hub, which is led by Swansea University, is the largest fundamental research activity centre working right now to decarbonise and improve the efficiency of steelmaking in the UK. I believe it is also looking at the quality of scrap steel and new technologies to ensure that we can make even more products using steel in the UK.

Other points were raised by the hon. Member for Cynon Valley (Beth Winter), who serves on the Welsh Affairs Committee. I will go through the transcript from that Committee; I am across most of the issues raised. She asked about an unlimited budget; I am not sure that having an unlimited budget is a good use of taxpayers’ money, nor does it answer the question about the demands of customers looking for cleaner green steel.

A question was asked about absorbing further technologies. We are looking at electric arc furnaces at the moment, but that product is just the first step. As other technologies become commercial, they could be considered in future. I thought the question about our taking a stake in the company was curious because that is not something that we do. Regarding the condition on the grant, the consultation is taking place, and agreements are still being finalised and will include appropriate conditions on the grant. That is why the transition board is vital to that conversation. The grant will be paid in arrears against set milestones for the build of the electric arc furnace.

[Beth Winter]

I am not sure you have answered all the specific questions from the Opposition. You made a comment earlier about the consultation process that left me slightly confused. You met the unions on Monday and said you want to wait to see what happens in the next few weeks. Is this a done deal—or does the consultation process actually have some teeth in terms of potential outcomes? The unions are pushing the multi-union deal. You met them this week and just intimated that we should wait to see what happens in the next few weeks so—this is my understanding of a consultation process—are you still open to alternative options? Tata may not be, but the UK Government could be, just as the Labour party has proposed if and when we get into government.