For over 100 years, the steelworkers in Port Talbot have been casting molten metal, serving as the vital force in their seaside town in southern Wales.

The factory’s towering chimneys, situated between Swansea Bay and the lush hills of west Glamorgan, have not only defined the city’s skyline, but also played a significant role in shaping its past, economy, and societal norms.

“People’s fathers and grandfathers are steelworkers,” says Gavin John, who owns Afan Ales, a craft beer shop in the town centre. “It’s ingrained in you from a young age: once you’re older you can get a job at the steelworks and you’re made.”

A large number of his frequent customers are employed at the steelworks or one of its affiliated companies, or have relatives who are. The factory, which has a workforce of over 4,000 in a town with a population of approximately 32,000, represents not only the local community but also the steel industry as a whole, and serves as a reminder of the remaining industrial strength in the UK.

According to both trade unions and industry leaders, the current year presents a critical moment for Port Talbot and the British steel industry. It is viewed as a pivotal point that will determine whether the sector will continue to struggle or experience a revitalization.

Unite, Britain’s biggest trade union, is about to present the government with a £12bn plan that it says can ensure a phoenix-like renaissance. The blueprint, a summary of which was shared with the Observer, is a response to several perceived threats.

Tata Steel, a major company in India, has owned the site since 2007. They are expected to reveal a plan to temporarily shut down their blast furnaces for four years as they work on creating a more environmentally-friendly and cost-effective electric alternative. This announcement was originally scheduled for November, but Tata decided to delay it. Unions are concerned that the closures could result in the loss of 2,500 jobs and have a ripple effect on the surrounding community.

However, sources in the industry speculate that the postponement was only temporary, and that the decision to discontinue operations will occur at the beginning of this year. This could be a contentious move, considering that Tata’s strategy includes receiving £500m from taxpayers.

In Scunthorpe, the UK’s only other blast furnace site, a similar £1.25bn plan is raising questions over the future of about 2,000 workers. That plant’s owner, Chinese firm Jingye, rescued British Steel in 2020, promising a “new chapter” in UK steelmaking. It, too is expected to ask for £500m in government support.

Both Jingye and Tata are interested in constructing electric arc furnaces, which have the capability to reuse scrap steel through the use of clean electricity. Blast furnaces, on the other hand, depend on coking coal, which releases high levels of carbon emissions.

Meanwhile, Britain would be the sole major economy in Europe and the G20 without the capability to produce steel from raw materials in a blast furnace. Instead, it would rely on imported steel for its aerospace and automotive industries, as well as for constructing hundreds of miles of railway track.

Unite is confident that transitioning to eco-friendly practices can be achieved without causing harm to communities by implementing job reductions or shutting down blast furnaces.

According to Unite general secretary Sharon Graham, the UK steel industry, which was once thriving, has significantly declined over the past four decades. However, she believes that the shift towards environmentally-friendly and low-carbon steel production presents a valuable chance to reverse this trend of gradual decline.

The union cites a McKinsey report stating that the global demand for environmentally friendly steel is expected to increase by ten times by 2030, reaching 200 million tonnes. Graham states that there will be a higher demand for steel, particularly green steel, in the UK over the next ten years. The concern is where this steel will be produced.

Unite’s proposal involves the government investing £12 billion over a span of 12 years to promote the revitalization of the steel industry, with the potential to generate increased tax revenues in just 10 years. Their strategy includes maintaining the operation of blast furnaces while transitioning to a completely decarbonized steelmaking process that utilizes electric arc furnaces and direct reduced iron furnaces (DRIs). These DRIs can utilize green hydrogen, produced through renewable energy sources, instead of gas to produce new steel.

The GMB and Community, unions representing steelworkers, have previously suggested using DRIs and electric arc furnaces as part of their plan to preserve jobs at Port Talbot. This proposal would allow a blast furnace to continue operating until 2032. However, Unite’s plan is more comprehensive and includes a 40% subsidy to address the high energy costs that have made steelmaking in the UK unprofitable in recent times.

British companies face significantly higher energy costs compared to their competitors in Germany and France. In particular, fees for connecting to the National Grid are exceptionally pricey. The implementation of environmentally-friendly steel production will result in even higher electricity consumption, according to Unite. Therefore, it is crucial that the industry is given priority for improved connections to the grid.

The union is advocating for revisions to procurement regulations, including a provision for “Buy British” that would provide financial benefits to promote the acquisition of steel made in the UK. The UK government has proposed implementing a carbon tax on imported steel starting in 2027, but Unite supports UK Steel’s request to move this timeline up to 2026, aligning with the European Union’s timeline.

According to Unite, this could potentially result in a doubling of UK steel production, which has decreased from 25 million tonnes in 1971 to approximately 6 million tonnes. This decline has also led to a decrease in employment, dropping from over 250,000 to nearly 34,000 jobs.

When a steel plant shuts down, it not only affects the workers directly employed there. The local cafes, pubs, suppliers, contractors, and shops that rely on the steelworks also feel the impact. This is not just a concern in Port Talbot, but also in other major steelmaking cities like Scunthorpe and Sheffield. The people of these communities are rallying together to save an industry that has been on a decline for a while.

In Port Talbot, Unite’s campaign has garnered support from various groups such as the nearby mosque, football club, and karate association. In Scunthorpe and Sheffield, the campaign has received backing from knitting clubs, boxing gyms, Methodist churches, and even a tattoo parlour.

Unite has emphasized that these groups represent a large number of voters. However, in Port Talbot, the government may not be concerned as Labour MP Stephen Kinnock has a significant majority of over 10,000. On the other hand, in Scunthorpe, Conservative Holly Mumby-Croft, who frequently mentions her family ties to the steel industry, has a majority of 6,451 that could potentially be overturned. In Redcar, where British Steel plans to construct an electric arc furnace, Conservative Jacob Young’s majority is even smaller at 3,527.

At Afan Ales, Gavin John believes that the government has not fully understood the potential of investing in environmentally friendly steel production. He notes that while everyone in the community is united, politicians seem to be indecisive. The funding they have allocated is adequate, but it only seems to support a gradual decline rather than promoting growth.

The progress is being closely monitored by voters and labor unions, as well as UK Steel. According to Gareth Stace, the director general, the industry is prepared to work together with the government and revolutionize steel production in the UK.

Source: theguardian.com