Steel Industry: Wales

Debate between Stephen Kinnock and Nia Griffith

Wednesday 21st February 2024 Westminster Hall

[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.

[Stephen Kinnock (Aberavon) (Lab)]

My hon. Friend is making an absolutely excellent speech. Picking up on her point, there is a need to sweeten the mix in an electric arc furnace with iron ore-based metallics; otherwise, there is no way that we can make the high-value products such as those for the automotive sector and tin cans. Is she aware that only 3% of the world’s iron ore-based metallics are in a pellet form that can be transported across the world and put into an electric arc furnace? Does she therefore agree that by far the best option would be to keep blast furnace 4 going so that we can continue to produce the ore-based metallics for the electric arc furnace, because with 3% of the global supply there is no way that that will be possible?

[Dame Nia Griffith]

I absolutely agree.

The Minister has previously referred to steel as “infinitely recyclable”. It is indeed a marvellous material, which is so much easier to recover and recycle than many other materials. However, while the lifecycle of a tin can may be a matter of months, steel used in car manufacturing or construction will be tied up in those products for many years to come. I very much hope that we will see an increase in investment in infrastructure projects.

We on the Opposition side have plans to make the UK a clean energy superpower. We have so much potential in Wales, with the prospect of building floating offshore wind farms in the Celtic sea and using Port Talbot and Milford Haven to deliver and service those projects. It is just a pity that through either incompetence or stubbornness the Government have wasted a year failing to get any takers for floating offshore wind because of the unrealistically low strike price offered.

Increased renewables and increased use of electricity mean upgrading the national grid structure. We need investment in our railways, housing, hospitals and so on. Have the Minister or her Department made any assessment of how much steel the UK is likely to need in the coming decade? How much of that steel will be used for short-term products that will reach the scrap market fairly quickly, and how much will be locked in infrastructure that we hope will last for decades?

Returning to the broader picture, while I recognise the contribution that the electric arc furnace can make, it is bitterly disappointing that the Government plans look likely to leave the UK as the only country in the G20 without primary steelmaking. While countries across Europe have been working on greening the primary steelmaking process using technologies such as direct reduced iron and green hydrogen—indeed, Sweden will start production in 2025—the UK Government have not supported any such venture.

There is huge competition out there to woo investment in the green technologies of the future, whether it is the US Inflation Reduction Act or similar incentives in the EU. When we look at the €2.5 billion that Germany has invested in developing green primary steel, hon. Members will understand why we in the Labour party say that that is the sort of sum needed and why, if we were in government, we would look to invest a total of some £3 billion in the industry, rather than this Government’s £500 million.

The reasons why we now face the end of primary steelmaking in the UK must include the failure of the Government to respond adequately to the asks of the steel industry, which it has set out so clearly time and again. We have pointed out, time and again, how much cheaper energy costs are in countries such as France and Germany, while in the UK there have been specific negotiated packages.