Steel Industry: Wales

I beg to move,

That this House has considered the future of the steel industry in Wales.

It is a pleasure to serve under your chairmanship, Sir Gary. First I want to express my gratitude to Mr Speaker for allowing this debate on the very important matter of the future of the steel industry in Wales, particularly as we were limited by time constraints during our debate on steel four weeks ago.

The news that we have had over the past few months has been devastating, with Port Talbot set to bear the brunt of Tata’s plans to shed 2,800 jobs across the UK. With so many jobs going in such a short time, the effect will reverberate right across south Wales, because the number of people affected will be far greater. That will include all the families of the workers, the loss of work for the contractors and the suppliers connected to the plant, and the massive loss of spending power in the community, with the knock-on effects that that will have on local businesses.

I pay tribute to the trade unions that have been working hard to present alternative plans to preserve jobs, keep primary steelmaking in the UK and facilitate a just transition to the green primary steel of the future. I urge both Tata and the UK Government to look again at those plans.

We stand today at a real crossroads for the steel industry in Wales and the UK. We have the opportunity to be at the forefront of the new green industrial revolution, or to allow ourselves to slide into a second-rate position to be left behind as the only country in the G20 that does not have primary steelmaking facilities. I will return to the bigger picture of steelmaking across Wales later. I know that many of my hon. Friends will talk about it, but I want to focus specifically on the future of the Tata tinplate plant at Trostre in my constituency of Llanelli.

Wales has a proud industrial history. Llanelli has thrived on the production of coal, iron, steel, copper and tinplate. The tinplate industry was already established in Llanelli in the 18th century. By the 19th century, 80% of the world’s tinplate was produced in south Wales, with Llanelli the tinplate capital of the world. Today’s Tata plant at Trostre in Llanelli makes a variety of different materials that go on to be used in a range of products—from the tin can that contains the baked beans that we buy to the compounds used to make the aerosol cans on our bathroom shelf.

Forgive me if I sing the praises of the humble tin can: a practical, versatile and green product. It is eminently recoverable and recyclable. Food in sealed cans keeps for months and does not need to be in the freezer or even the fridge—a great advantage for those who cannot afford to run a freezer or have no access to one. Food in tin cans tends to be cheaper than food in other forms of packaging. Furthermore, those in dire straits can even resort to eating tinned products cold without the need to afford the energy costs to heat them. It is little wonder that in hard times, covid and the cost of living crisis, sales of tinned products have held up. By the way, back in 1935, Felinfoel Brewery in Llanelli was home to the first canned beer in the UK and one of the first canned beers in Europe.

Trostre currently receives its steel from Port Talbot, just 20 miles down the railway track. That makes good economic and environmental sense. Most importantly, Trostre workers know that they can depend on the consistency and quality of the steel that comes from Port Talbot. Tata tells us that when it closes the blast furnaces at Port Talbot in the short term before the electric arc furnace is built, it will import steel to supply the Trostre plant. That will be imported steel made in blast furnaces abroad, so there will not be any saving in carbon emissions—quite the opposite. Processes abroad might be dirtier, and then there are the costs and emissions associated with transporting the steel to Trostre.

The challenge will be to source the appropriate quality of steel to satisfy Trostre’s needs. As Trostre makes a number of products and serves a number of different customers, that means steel of the right quality to satisfy all those requirements. As we can imagine, workers at Trostre are very anxious to know that deals for supplies of quality steel have all been sorted out before anyone even thinks about switching off the blast furnace in Port Talbot. They and I know that the works manager and his colleagues at Trostre are doing all they can to assess potential sources, but inevitably, instead of the security that we currently enjoy with our supply from Port Talbot, people are feeling worried.

Importing steel means that there are far more unknowns. We will be more vulnerable to logistical difficulties or price fluctuations; if there is a shortage of supply, foreign producers may prioritise their home customers. What talks has the Minister had with bosses at Tata about where they will be sourcing the imported steel for Trostre, what guarantees they can give that the quality will satisfy all the requirements at Trostre, when they expect the first shipments to arrive, and what risk assessments and contingency plans they have drawn up to cope with challenges such as price fluctuations or a tightening of the market if other countries want to prioritise their own needs? Will she also tell us how imported supplies will be affected by the carbon border adjustment mechanism?

The Government have promised half a billion pounds for Tata to develop an electric arc furnace. Will the Minister tell us whether there is any conditionality attached to that loan in respect of Trostre? In other words, is its availability to Tata contingent not just on building an electric arc furnace but on securing short-term supplies for Trostre—and, indeed, Shotton—and safe- guarding jobs there?

I commend the hon. Lady for securing this debate. She is right to say that the job losses at Tata Steel affect Wales, but they also affect the ability of the whole of the United Kingdom of Great Britain and Northern Ireland to manufacture steel for our businesses. Does she agree that the production of British steel, which is of the highest quality, needs greater governmental support to ensure it can compete with steel imports from other nations? Does she further agree that the steel sector can provide employment throughout the UK, and that it should be encouraged to do so?

Indeed. As the hon. Gentleman knows, there have been five asks from the steel industry over many years, which encompass those issues.

Tata says that for safety reasons it is not possible to keep the blast furnace going until its proposed large electric arc furnace is up and running. However, there have been other suggestions, including starting with a smaller electric arc furnace, which could be built while blast furnace is maintained. What discussions has the Minister had with Tata about keeping at least one blast furnace going in Port Talbot until an electric arc furnace is up and running?

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.

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

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.

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?

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.

I congratulate the hon. Lady on securing the debate and on her leadership on the issue. It seems that the only hope is to try to persuade Tata to delay some of the implementation of its plans until the change of Government, we all assume, by the end of the year.

As the hon. Lady mentioned, there is an alternative proposal from the Labour party for investment in the steel industry. Does she agree that there is a potential role for the Welsh Government to negotiate with Tata? As they sit on the transition board, they would have close relations with Tata executives to put forward the Labour plan, which would be ready to be implemented this time next year.

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.

I call Christina Rees —and happy birthday!

Thank you, Sir Gary—21 again! As always, it is a pleasure to serve under your chairmanship.

I congratulate my hon. Friend the wonderful Member for Llanelli (Dame Nia Griffith) on securing this vital and timely debate. As we contemplate the future of the steel industry in Wales, we are discussing not merely the fate of an industrial sector but the heartbeat of a nation’s economy and identity, and nowhere more so than in the Swansea bay region generally and Port Talbot specifically. The area that includes my Neath constituency and its town has long been synonymous with steel production, its history intertwined with the rise and fall of coal and the resilience of its workforce. Today we stand at a pivotal moment in that narrative, poised to script the next chapter in the saga of Welsh steel.

The challenges facing the steel industry are undeniable. Global competition, fluctuating market demands and environmental concerns loom large on the horizon, yet alongside those challenges lies the opportunity to bring about transformation and renewal. The industry cannot do that against a backdrop of uncertainty and a diminished workforce. The idea that 2,800 jobs will be lost from Tata Steel operations across the UK—the majority from Port Talbot—is unthinkable. The rejection of well thought out union plans for a gradual transition to decarbonisation means the almost immediate closure of two blast furnaces. The single electric arc furnace replacement will obviously produce less carbon dioxide, but also fewer jobs.

First and foremost, innovation must be at the fore- front of our endeavours, from embracing advanced manufacturing techniques to investing in research and development. We must harness the power of technology to drive efficiency and sustainability. Innovation will always be the cornerstone of a vibrant steel industry in Wales, but electric arc furnaces do not produce virgin steel and the difference must be considered. The UK has only two sites that use conventional blast furnaces—Scunthorpe and Port Talbot—which collectively produce 5.9 million tonnes of steel per year and make up 82% of UK steel production. Despite the UK importing most of its virgin steel, the notion that we become a country that produces none is beyond the pale. British Steel, the owner of the Scunthorpe plant, is also planning to replace its virgin steel production by 2025. Should that happen, the UK will become the only G20 country that does not produce its own virgin steel. The consequences need to be fully understood.

I commend the hon. Member on her excellent contribution. Is the reason for the backlash to this announcement not the fact that it appears that the UK Government are providing £500 million to lose 3,000 jobs in Wales, which has been a massive PR disaster for them?

I completely agree with the hon. Gentleman, and thank him for his important point.

The future of the steel industry in Wales is not predetermined; it is ours to shape and define. By embracing innovation, fostering collaboration, championing sustainability and prioritising our people, we can build a future where Welsh steel shines brightly on the global stage. The story of steel should not feature uncertainty, job losses and community adversity. Let us write the next chapter in the industry’s history: one of resilience, renewal and prosperity for generations to come.

Happy birthday to my hon. Friend the Member for Neath (Christina Rees). I commend my hon. Friend the Member for Llanelli (Dame Nia Griffith) for securing this important debate. Its importance was highlighted for me and other hon. Members on Saturday, when we marched in solidarity with the workers of Port Talbot and Newport and the unions, which I praise for their work. There was a lot of strong political support on both marches, including from my hon. Friend the Member for Newport West (Ruth Jones).

We should never underestimate just how difficult a time this is for these highly skilled workers and their families. I should point out to the Minister that the average age of a steelworker in Llanwern is now 34, so they are people with mortgages and families to support. That will also be true for those at Port Talbot, represented by my hon. Friend the Member for Aberavon (Stephen Kinnock). In my time as an MP, I have seen year after year just how workers in Llanwern have repeatedly had to adapt and innovate to keep the business alive. I pay tribute to them for that. These are well-paid jobs and, as we often say, for every one job in the plant, there are estimated to be three more in the wider community.

I am sorry that the Government and the company have put the workers in this position. We feel deeply for them and we commend the unions for all they are trying to do, because this is a bad deal for steel. We need the best deal for steel, not the cheapest deal for steel, which is what the Government are offering. As the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said, no matter how the Government dress it up, they are giving £500 million to Tata to make redundant up to 3,000 people—300 in Llanwern. In doing so, they are in effect ending our history of making virgin steel—we will be the only country in the G7 and G20 not to do so—at a time when we will need this steel to build our green infrastructure.