What does it mean for the UK that Tata Steel has cut jobs in Port Talbot?

Gav Moule was supposed to be celebrating his 21st year of employment at the Port Talbot Steelworks in South Wales. The decision of the Indian owners of the steelworks to shut down its polluting furnaces has caused the 45-year old to fear he won’t be able support his family.

He said, “I’m a third-generation steel worker like my father and grandpa.” The prospect that after Port Talbot shuts down, imported steel may end up in the deep-water harbour of Port Talbot — at which point he could be out a job — is most galling.

Moule stated that “our competitors around the world still use blast furnaces.” “We will be shipping in some the dirtiest steels in the world.” Diesel ships are used to transport steel halfway around the globe. “Tell me, where is the green agenda with that?”

Gav Moule, who has been working at Port Talbot Steelworks for 21 years.

Port Talbot, a town in Wales, has been devoted to steelmaking for over 120 years. Tata Steel of India, which owns the works since 2007, announced that it will close its coal-fired furnaces. This would result in the loss or nearly 3,000 jobs. The company is moving to electric furnaces to meet its net-zero goals. This will result in a reduction of approximately 3,000 jobs.

Tata will invest £750 million in upgrading Port Talbot. This is on top of £500 millions from the taxpayer that Rishi Sunak had made conditional upon the green switch. The green switch will transform the 2,500-acres of coal piles, railways, and industrial sprawl. It will also bring back the soul of a close-knit community.

Union leaders blasted the plan as “shortsighted” and “absolutely destructive” which would “inflict irreparable damage” on the UK’s ability to make steel.

But Tata’s decision poses serious questions about our national sovereignty. Do we need a steel sector? Will Tata’s plan deliver this?

Stephen Kinnock of Port Talbot Labour Party, accused Tata’s “managed decline”. Kinnock said that electric arc furnaces could not produce the steel needed by the UK. This appeared to be in contradiction with the green agenda promoted by Sir Keir starmer, leader of the Labour Party.

He said that Tata Steel would be unable seize commercial opportunities in the future and leave Britain more dependent on steel imported from countries whose government’s may not always have Britain’s interests at heart.

Ben Houchen said that electric furnaces will produce “green” steel. He said, “You cannot have it both.” You can’t keep blast furnaces and have “green steel”.

It may seem trivial, but a political dispute over the production of steel has significance. The “virgin” steel that is produced at high temperatures with coking coal. Port Talbot has been dubbed one of the UK’s most polluting locations. Some estimates say that it produces 2% of the UK’s carbon dioxide.

Hydrogen may be a long-term option to replace coal. Electric arc furnaces are used in many countries because they emit less and can be used to process scrap metal. The resulting steel may not be high enough quality to be used by industries that require virgin steel, such as car manufacturing and food tin manufacture.

Houchen points out that British Steel, the sole other producer of virgin steel in Britain, is also planning to switch over to an electric-arc furnace. It believes it can meet the needs of its customers. He said, “They believe they can produce all the products that they are currently making.”

Gareth Stace, of the trade body UK Steel, agrees. All grades of steel are made possible in an electric-arc furnace. Nucor, in America, produces hot-rolled coils from electric arc forges. Our customers are looking for what they call “net-zero” steel.” The UK, on the other hand, has surplus scrap steel and does not have the facilities to convert it into usable steel.

Stace said, “We export 80 percent of the scrap metal we produce in the UK to countries such as Pakistan, Bangladesh and Turkey to be used to make steel. Then they sell it back to us.”

Stace says that the switch to electric-arc production will reduce these imports and increase the independence of steel production.

Closing Port Talbot blast furnaces helps Wales achieve the stringent carbon emission targets set forth by the Welsh Government. In 2016, the Labour-run devolved government implemented a nonstatutory target to reduce carbon emissions by 3% year-on-year. According to some estimates, the closure of Port Talbot could reduce Wales’s carbon emissions by up to 20 percent.

Port Talbot, South Wales is dominated by the Tata Steelworks.

In the meantime, as Tata’s electric-arc furnaces are built, customers will likely import the steel needed for their finished goods. Tata critics say that this would mean, in essence, outsourcing the UK’s emissions as this steel imported would be forged abroad in polluting explosion furnaces.

Electric arc furnaces are used in approximately 30 percent of the global steel production. The Chinese reliance on blast furnaces has led to an understatement of the proportion of steel production in western countries. UK Steel claims that only 20 percent of UK production comes from electric arc furnaces.

Electric furnaces, while being greener than gas or oil-fired ones, rely on electricity generated by burning fossil fuels. In Germany, most of the electricity is produced from coal. This includes lignite which is a very toxic type of brown coal. France produces more electricity using nuclear power, which doesn’t emit carbon.

Many accept that the industry must decarbonise, but there is some doubt as to whether it should happen so suddenly. British Steel, a Chinese-owned company in Scunthorpe plans to continue operating its blast furnaces as it constructs an electric arc substitute. The company still wants a subsidy from the taxpayer to upgrade their sites and reduce losses of £1 million per day.

Tata says that it would be too expensive to operate its blast furnaces during the transition. Tata Steel UK lost £135m in its latest quarter, or almost £1.5m per day. The trade union Unite says that Tata Steel parent company paid £1.4 billion as dividends from 2019 to 2023 and had £1.6 billion in reserves.

UK steelmakers have pointed out that European counterparts received state subsidies for the renovation of their sites. Salzgitter received €1 billion in 2022 from the German government. ArcelorMittal was awarded €500 million by the Spanish government.

The closure of the two Port Talbot blast furnaces will result in the loss 3,000 jobs. Tata plans to replace the old blast furnaces with an electric arc furnace.

Britain hasn’t been a major producer of steel for decades, a fact often forgotten in debates. In the 1960s the UK produced almost 30 million tons of steel a year. Now it only produces 6 million. This is less than half of the 13 million tons produced in France and less than one fifth of the 35 millions tonnes from Germany.

If British Steel does as predicted and switches to electric arc kilns, then the UK would be the only G20 country without blast furnaces. Alun Davies is the National Officer for Steel of Community Union. He said, “We need our industry.”

The importance of events for Port Talbot residents cannot be overstated. Ryan Morgan is the owner of the Steel Town Coffee Company, located in the centre of the town. We all believed that the situation was under control because the news had died down. It was a surprise because we hadn’t heard anything,” he said.

Morgan estimates that approximately half of his clients are steelworkers, contractors or Tata employees. In this town, every brother, cousin and dad knows someone working in the steelworks.