3. Will the First Minister make a statement on the steel industry? OAQ(5)0010(FM)

11. Will the First Minister make a statement outlining any discussions the Welsh Government has had with the 7 organisations that have expressed an interest as potential buyers of TATA Steel UK? OAQ(5)0004(FM)

Yes. Llywydd, I understand you’ve given your permission for questions 3 and 11 to be grouped. I’ve made it clear that it is an absolute priority for our Government to maintain a sustainable steel making presence in Wales, and we are doing everything possible to ensure this happens. That means working closely, of course, with the UK Government.

Over the election period, First Minister, I and Plaid Cymru colleagues went to visit the engineering department within the new innovation campus. Following on from that meeting, I requested Swansea University to send me some figures as to what it would cost to set up a new steel and innovation unit in the university, because it’s so close—it’s in prime, premium position—to Tata Steel to be able to do that. It would cost £17.2 million over four years for that department to be realised. First Minister, if your Government believes that saving the steel industry is so vitally important, will you put money behind this new innovation project to make sure that steel can be sustained here in Wales?

Well, I too visited the campus as well, and the point was made to me. I’ve not yet seen a formal bid of any kind, personally, coming forward, but, of course, any such bids would be examined very carefully by us as a Government.

First Minister, could I first of all thank you for the leadership you’ve actually shown during the electoral campaign here in Wales on the steel crisis? My constituents very much appreciated that leadership here in Wales. Since the Assembly last met, actually, on 4 April, when we discussed the steel crisis, there’s been a quickly moving process in the steel crisis, particularly in relation to selling Tara Steel interests here in the UK, and there have been several bodies interested and expressing an interest, and I think yesterday was the deadline for bids going in. What discussions has your Government had with any of those bodies that have submitted bids for buying Tata Steel and, particularly, what support are you offering to those companies? Can you also actually indicate as to whether this includes the continuation of the heavy end at Port Talbot, which is critical to the works, to ensure that not just the works continues as an integrated works—they are making steel from raw materials, but also that’s where a lot of the contractors are employed, and the loss of that heavy end will have a huge impact upon employment in my area.

Yes, I’ve met with two of the organisations who’ve put forward an expression of interest. The heavy end is absolutely crucial to the future of our steel industry within the UK, and I’ve made that very clear. Nor would I support any potential deal that saw the diminution of pension rights on behalf of either the pensioners or the workers who are currently working for Tata. That is absolutely crucial. Tomorrow, Tata will have their board meeting—I will be in Mumbai tomorrow—and they will be looking to take a decision, we understand, to reduce the expressions of interest down to a shortlist. What is encouraging, of course, is that there are businesses out there that are looking seriously at ensuring the future of our steel industry and, importantly, of course, not just picking off the most profitable bits, but ensuring that the heavy end of Port Talbot continues.

I welcome the fact that the First Minister is going out to Mumbai. I was wondering, in light of the fact that the Welsh Government has supported the Excalibur bid, which is also very welcome, to date, will he be making active representations on behalf of that team? In terms of their vision, of course, we know that they are seeking a continuation of primary steel production; they’re also involving the workforce in terms of an employee share-ownership plan. So, will he be making active representations that that bid should go forward to the next stage?

Well, we already have. Certainly, I made strong representations to the UK Government that they should be seen as one of the preferred bidders. I’m encouraged by the fact that they seem to be talking to one of the other bidders, namely Liberty Steel. I think that’s a good blend. I think the management buy-out option contains a lot of technical expertise, but has not yet raised the money. With Liberty Steel, they are a substantial business, but have not normally been involved in the heavy end of production. I think that’s a useful tie-up and I look forward with interest as to how that progresses. I hope tomorrow that Tata will look very carefully at the bids and will certainly consider strongly the option of the management buy-out, possibly, of course, linked with Liberty Steel.

First Minister, can you outline the importance the Welsh Government further places on the 11,000 steel-making jobs alone to the communities of Wales, and not just where the steel sites are located, but, for instance, in communities like mine in Islwyn, which was founded in steel, and also in terms of the primary making capabilities of that remaining in Wales? Thank you.

Absolutely. The industry is interlinked, because, having been to Trostre and Llanwern and also to Shotton—at Shotton, particularly, they were saying to me, ‘Well, we do make money, but the reality is we rely on Port Talbot for steel. It would take us six months, roughly, to source steel from somewhere else. In the meantime, there is no guarantee that we’ll be able to keep our customers.’ I think that’s sensible. The reality is we cannot be a major industrial economy if we don’t produce our own steel. That is a fundamental requirement of being an industrial economy. We need to produce the steel that we need for industry, but also, of course, the steel that’s needed for the armed forces, to equip them properly. This is an argument well rehearsed by ourselves and the UK Government. It’s encouraging to see that there is interest. A more worrying scenario would have been if nobody had come forward with a view to buying all of Tata’s assets in the UK. Certainly, it’s important that Tata maintain the stance that they have taken in terms of wishing to see a viable sale go forward. I will be calling on them again tomorrow to continue with the goodwill they’ve already shown.

First Minister, I was a little disappointed to hear that you’ve only managed to speak to two of the potential buyers. I wonder if you could tell me if you took proactive steps to speak to all those who’d shown an interest in putting bids together and, within the terms of commercial confidentiality, the kind of range of costs that the Welsh Government is most likely to support in making any bespoke promises to the bidders that you did speak to.

Well, we have the £60 million already on the table; half of which is a commercial loan, the other half of which is in the form of grant money. We are still looking at whether there is more we could do on business rates. It is right to say that the initial advice was that we could offer €200,000 over three years. We are examining that once again to see whether there is a way that we can assist further. But nevertheless, the amount of money that’s on the table represents roughly four years’ worth of business rates for Tata in any event, and that money will be on the table for any new buyer.

First Minister, Tata’s Orb steelworks in my constituency, as you know, makes world-class quality electrical steels. I meet with them on a regular basis and it’s clear to me that there’s been a very good working relationship between the Welsh Government and the Orb works over a period of time. Would you assure me that that relationship, which has supported machinery, better process, upgrading skills and training, will continue into the future so that we can build on these world-class products for the Welsh steel industry in general?

Absolutely; I can give that guarantee. One of the elements of the package we’ve offered is a €2 million sum for skills and training. Of course, we’ve worked very closely with the industry in years gone by to make sure that we’re able to assist them with bespoke training packages. We see, of course, the result in the highly specialised work that’s carried out in the Member’s constituency.

First Minister, I appreciate that parties involved have had to sign non-disclosure agreements, which limits the information that you might be able to give, but following on from John Griffiths’s question, can I ask you if you have had any discussions specifically about the viability of the Llanwern part of the Welsh steel operation, of direct concern to my constituents? We know that there are some proposals to upgrade the Port Talbot works to an arc furnace, for instance, and some other proposals as well. Do you have any information in terms of modernisation proposals to make the Llanwern steelworks more viable moving forward?

Well, the difficult part of the steel industry at the moment is the steel-making end in Port Talbot. The rolling mills at Trostre, Llanwern and Shotton are all in a good financial position. That said, I do know that the loss at Port Talbot has already been cut by two thirds. It’s still losing money, but there’s been a significant turnaround in a very short space of time. But it’s hugely important—and I’ve made this point many times before, and I’ll make it again tomorrow—that Tata’s assets in Wales are taken as a whole and that we don’t see piecemeal sell-off of what is seen as the more profitable ends despite the supply issues, but rather that we see the heavy end at Port Talbot being seen as an integral part of any sale. Huge progress has been made over a very short space of time to move towards what might be, in time, a break-even position. Given where the heavy end was before Christmas, that will be an enormous achievement.