Steel Industry: Wales

Gary Streeter Excerpts

Wednesday 21st February 2024 Westminster Hall

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

We are all aware of the risk to the 2,800 jobs at Port Talbot and elsewhere. We need to be highly alert to the fact that the one blast furnace is part of ensuring that there is a just transition for the community. Other communities in Wales are facing losses—including the farming community, which will face 5,500 job losses if the Welsh Labour Government bring in the sustainable farming scheme, and the just transition is exactly the same issue.

I am sure the hon. Lady will join me in asking the Minister and other Governments to ensure a just transition for communities across Wales that have experienced decades of suffering because transitions have not been carried out properly as a key part of ensuring the industries of all our communities.

[Sir Gary Streeter (in the Chair)]

Order. I remind Members that interventions should be brief and on the subject of the steel industry in Wales.

[Dame Nia Griffith]

Indeed, we do seek a just transition for the steel industry.

Of course, it is not just Trostre that Port Talbot supplies. If, as current plans indicate, the idea is to close the blast furnaces several years before the electric arc furnace is ready, all the downstream customers will need supplies. The Government could argue that if Tata closes the blast furnace in 2024 or 2025 but does not have an electric arc furnace up and running before 2027, how it bridges that gap, how it sources supplies elsewhere and how it keeps its customers happy are its problem. However, if those supplies are not there, downstream businesses could go out of business, causing huge job losses. It would be catastrophic for us in Llanelli to lose Trostre. Because the Government are putting half a billion pounds in, and because of the worry about job losses, they should seek assurances from Tata about Trostre, which is why I asked the Minister that question.

We accept that the electric arc furnace has a role to play. Indeed, CELSA Steel UK in Cardiff, a very successful business, produces steel from an electric arc furnace. However, there is work to be done to assess the suitability of the steel produced in electric arc furnaces to meet all the requirements of the products produced in Trostre. It is not as simple as throwing any old scrap into the electric arc furnace; clearly, the quality of the source material is important. I understand that a certain amount of metallics are required, which are not necessarily easy to source. We currently export scrap steel, and it is easy to see the logic of recycling that steel here in electric arc furnaces. However, we cannot assume that all that scrap steel will just turn up at the electric arc furnace in Port Talbot or at the one that I understand is planned for Scunthorpe: it must be sourced.

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[Dame Nia Griffith]

Anyone who can have influence over Tata would be welcome to make those suggestions.

A moment ago, I was talking about specific negotiated packages that this UK Government have offered. Although there have been those packages, we can see why when steel and high-energy industries make decisions, they cannot rely on limping from package to another but need long-term security with low energy prices, requiring substantial measures from the Government such as massive investment in renewables and reform of the energy market. We in Llanelli look across at IJmuiden in the Netherlands, where Tata has a tin plant works similar to ours. However, in close proximity to IJmuiden, Tata will keep a blast furnace open and develop a direct reduced iron facility. This is the reality we are facing: greater investment for the future going elsewhere. The UK Government need to ask themselves why. I hope that in responding today the Minister will answer my specific questions about the challenges facing Tata’s tinplate works at Trostre, as well as the broader issues facing the steel industry across Wales.

[Sir Gary Streeter (in the Chair)]

I call Christina Rees —and happy birthday!

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[Beth Winter]

That is an extremely important question. Another question that my hon. Friend raised to which we did not get a response was on the timeframe within which the £500 million is going to be paid. A series of questions were asked during the four evidence sessions that day—if the Minister has not seen the transcript, I urge her to look at it—and a number of them remain unanswered. We have brought some of them to light here today.

My hon. Friends have spoken in much more detail about the devastating impact that the closure of the steelworks in Port Talbot, and many other businesses in Wales, is going to have on our communities. Wales was at the forefront of the industrial revolution—our communities were built on coal, iron and steel—but our history is one of wealth being extracted from our country for the benefit of a few, and that continues. This is a prime example of the lack of consideration given to the people and communities of Wales.

We can and will be at the forefront of change. The multi-union deal—indeed, all the deals that have been proposed by the trade unions—offers a solution. Wales can be at the forefront of a green industrial revolution, where the wealth is not only created in Wales but retained in our communities, so that we no longer suffer unacceptable levels of poverty and deprivation. We are a wealthy nation in terms of our natural resources, and we deserve a different future. We will continue to stand in solidarity with our workers as well as our trade unions to say that we are not going to put up with the continued extraction and exploitation of our communities in Wales. I look forward to hearing the Minister’s response to my specific questions. Diolch yn fawr.

[Sir Gary Streeter (in the Chair)]

We now turn to our Front-Bench speakers. I call Sarah Jones.

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[Ms Ghani]

Very briefly, because I am worried that I will run out of time.

[Sir Gary Streeter (in the Chair)]

May I make an observation? It is helpful if the Minister can respond to one intervention before people bounce up and down for the next one. Let us take it calmly.

[Sarah Jones]

It has been a while since I bounced up and down, Chair; I am too old for that. Is the Minister exploring incentives to keep scrap steel in this country? Because at the moment we export it all. Is she looking at VAT relief, tariffs or restrictions to help that process?

[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.

[Sir Gary Streeter (in the Chair)]

Order. That was another long intervention. I remind the hon. Lady that any reference to “you” is a reference to me. I am certainly open to further negotiations, but that does not really matter.

[Ms Ghani]

This is a decision for Tata to take. It has made it clear that the offers put forward by the unions are not really credible, because it does not think they enable a transition without a huge amount of losses, so they are not financially credible. However, the consultation is taking place. It is not that I just met the unions this week: I meet them regularly and obviously I attend the transition board as well. The consultation is to ensure that Tata can make the right decision, and one would hope that it does that in consultation with the unions and with their overall support, accepting that it is incredibly challenging when we are talking about any level of job losses.

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[Sir Gary Streeter (in the Chair)]

Minister, this is the last two minutes.

[Ms Ghani]

We can look at the reality of a DRI plant at Port Talbot, as well as examples across the rest of the world. A DRI plant requires even fewer people. I was looking at a plant in Texas that ended up having a 2 million tonne DRI plant, and it only requires 190 jobs. It is possible to transition; the opportunity to transition is there. There is often talk of hydrogen. That technology has not been tested to the capacity needed for this particular plant or for the levels of steelmaking that we need in the UK.

Let us deal with the matter in real terms. These conversations have been going on for years. I have spoken to the hon. Member for Aberavon, who represents Port Talbot, and I know that we could have continued the conversations and had a cliff edge, with Tata leaving; or we could have come up with the biggest settlement for steel and a consultation to make sure that the least amount of jobs are impacted—and that is going to provide certainty and security for steelmaking at Port Talbot for years to come.

I fear I have run out of time.

[Sir Gary Streeter (in the Chair)]

Dame Nia Griffith will have the final word.