Thousands of steel jobs likely to be lost in Wales

Martin Shipton

Up to 3,000 steelmaking jobs may be lost in Wales, despite the expectation that UK Government aid worth £500m will be offered to Tata Steel.

An announcement is expected this week, but a political source told us: “It will not be good news. In fact realistically there are only two options – bad news or catastrophic news. The government is doing its best to save as many jobs as possible, but the situation is very difficult.

“Many, many millions of pounds have been lost by Tata’s blast furnace division at Port Talbot and that was never going to carry on forever.

“The worst case scenario would be that all 8,000 Tata jobs in the UK would go, together with many thousands more in the supply chain. The government is very close to signing off on the £500m deal to avoid that, but unfortunately it will still mean many job losses in Wales.

“Hopefully some of the blast furnace workers would be transferred to work on a new electric arc furnace, with others, mainly aged over 45 or 50, receiving generous redundancy payments.

“The Treasury is not known for its generosity, so a very powerful case has had to be made for giving Tata the money they have been seeking. The alternative – losing all the Tata jobs – can’t be contemplated. The agreement is now very close to going over the line.”

Decarbonisation 

Over the weekend Tata issued a statement which said: “Tata Steel is continuing to discuss with the UK Government a framework for continuity and decarbonisation of steel making in the UK amidst very challenging underlying business conditions given that several of its heavy end assets are approaching end of life.

“Given the financially constrained position of our UK business, any significant change is only possible with government investment and support, as also seen in other steel-making countries in Europe where governments are actively supporting companies in de-carbonisation initiatives.”

Peter Hughes from Unite the union told BBC Wales that meetings would take place later this week between Tata, the unions and the UK Government.

“We want green jobs but we don’t want green jobs at a detriment to jobs and Unite will fight the job losses,” he said.

Mr Hughes added that the UK was exporting scrap which could be used to make steel in Wales and the rest of the UK.

“When you look at investment with electric arc furnaces – you need more than one,” he said. “There are two blast furnaces in Port Talbot at the moment with the coke ovens and the rest of the heavy end.

“If you’re really serious about having a steel future – we need at least two, maybe three, electric arc furnaces in Port Talbot to protect the livelihoods and then be able to provide steel for the rest of the UK and make sure the UK Government, whether it be this government or a potential Labour government next time – that they do buy and make sure that is procured in the UK, made in the UK.

“The last thing we want to do is see our steel industry all full of exports.”

Electric arc furnaces

Aberavon Labour MP Stephen Kinnock, whose constituency includes Port Talbot, has expressed concern that the “focus seems to be very much on electric arc furnaces”.

He added: “Nobody’s really talking about hydrogen, direct reduced iron, carbon capture and storage, which are all vitally important routes to decarbonising the steel-making processes.

“If we don’t have all those different routes we won’t be able to make all the grades and quantities of steel that we need to retain our customer base. And if we don’t do that there will be more job losses than are necessary, and it will be a missed opportunity by the government and by Tata Steel.”

According to a factsheet issued by the company in 2020, the majority of its British employees are based in Wales, where it has centres at five locations. The largest by far is at Port Talbot, where there are 4,000 employees engaged in integrated steelmaking. There are 800 employees working on strip products at Llanwern, Newport; 700 employees at Shotton, where “hot dip galvanising”, organic coating and panel line-beating systems are undertaken; 650 employees at Trostre, Llanelli’s packaging steel plant; and 200 building systems employees at Caerphilly.

The company also has a total of 1,550 workers at four centres in England.

Advantages

According to those in the industry, the advantages of electric arc furnaces are that they are capable of producing the full range of steel grades; that they are not dependent on a particular type of charge – scrap, sponge, iron, pig iron or hot metal; that they involve relatively low capital outlay to develop; that the melting process can be programmed and automated; and that there can be high efficiency and flexibility.

However, the main disadvantage of electric arc furnaces is that the heat of the arc after the material is cleared must be transferred to the molten steel through the slag, which is indirect heating.

Thermal efficiency is poor. The furnace is in the shape of a basin, and plenty of the heat of the arc is lost through the furnace cover and the furnace wall.

In addition, from an employment point of view, electric furnaces also need fewer employees than blast furnaces.