3. What analysis has the Welsh Government undertaken of the impact on the steel industry in Wales of the merger between TATA steel and ThyssenKrupp AG announced last week? 195

We broadly welcome the announcement to create 50:50 joint venture to combine their European steel businesses and we continue to engage with the company and the trade unions to consider the detail of the announcement.

I thank you for that answer, Cabinet Secretary. The announcement has undoubtedly lifted a cloud that has been hanging over the steelworks in the town for over two years now and offers hope of a secure future for the steel making in Port Talbot and other plants across Wales, because let's not forget that, actually, Port Talbot feeds those other plants as well. It's been welcomed by steelworkers, as you pointed out, who are actually meeting today to discuss it, as well as trade unions, politicians and the community across the town.

We are aware that the dark skies can come back—that's the problem. This proposal is actually focusing on the medium term and not the long term, because it talks about no compulsory redundancies before 2026 and the work to be done on the blast furnace to keep it operational until about 2026. So, there's still a longer term position. The ThyssenKrupp chief executive officer has often said that he's focusing on European operations and we are possibly not in his mind when it comes to that. 

So, will this agreement impact upon the investment that has already been committed by the Welsh Government, because you've already made the commitment to the power plant—phase 1 has gone through. The funding has not yet been released for phase 2. I know there has been an issue of conditionality. Where are we on that? So, again, there's security coming through from the Welsh Government on that process, on that side of it. Have you had discussions with Tata on this matter as to what investment they're talking about in their merger and where that will go? Will it be simply in maintenance and repair, or will it actually be in new technologies and investment in new plant to actually take it to the next level of productivity, such as the capital line for new coke ovens that need to be undertaken? And have you had discussions with the Secretary of State for BEIS, because there is still a steel sector deal that has not yet been agreed, and it seems, at the moment, the UK Government is failing to do its bit, and if we want long-term sustainability, you also have to have discussions with them? So, how is it all pulling together now, based upon this merger plan?

Well, can I thank David Rees for his questions? I'd agree that the announcement does indeed offer hope for all of the plants across Wales and the UK. I think it's worth reflecting on where we were just two years ago, when skies were indeed very dark, and it was as a consequence of the hard work that the Welsh Government carried out, to a great extent, that we've reached the point that we're at today, where all those involved in the agreement can recognise the strength of the Welsh steel-making family. In terms of ensuring that dark skies don't return, we need to guarantee the competitiveness of Welsh steel making, as well as ensure that it is efficient and it is productive. Now, we are obviously carrying through our support. Our support, in many respects, will be dependent on binding conditions being agreed by Tata. However, it's essential that the UK Government steps up to the mark and addresses the concerns of the sector, particularly in regard to uncompetitive energy prices, but also the need for a sector deal. These were issues that were discussed very recently at the UK steel council. They were issues that I raised regularly with Ministers within BEIS, and that we raised through officials with their counterparts in BEIS, and indeed other departments. It's an interest that my colleague Lesley Griffiths has, considering the decarbonisation agenda and the need to ensure that we drive down emissions. We are able to support businesses in the steel sector in reducing carbon emissions, in making sure that there are power savings, in making sure that employees are fully and properly skilled, and our support will continue into the future. But if we are to get the efficient, competitive, productive steel-making operation that we wish to see for the long term in Wales and the UK, it will require decisive intervention by the UK Government.

Thank you, Cabinet Secretary, and I associate myself with the questions, actually, that were asked to you by David Rees. I think there will still be some residual concerns, going back to what we were talking about 18 months or so ago about the relationship with ThyssenKrupp and Tata, and the date that David mentioned, I think, is something that's firmly printed in our minds now. With that in mind, have you had any indication at all of the timeline for any potential investment in this plant? Obviously, the blast furnace is of huge importance there, and it's great to get the promises, but until somebody signs a cheque, it's a bit difficult to rely on those promises.

With the steel sector deal, obviously I agree that we need to know about this now, and I don't suppose that the Trump announcement has helped enormously.  Energy costs—and I think you did refer to it briefly—were a big issue when we were talking about this some months ago. Have you had any, shall we say, promising mood music that that's less of an issue now, and what steps have been taken to try and resolve those?

And then, finally, Tata has of course made huge commitments in terms of Swansea bay university, and a relationship with the steel innovation centre under the city deal. I wonder if you've had any news on whether this merged partnership would also be prepared to commit in the way that Tata's done to date. You said that you were considering the announcement, and perhaps you could raise that in any questions that you have when you're speaking to Tata and ThyssenKrupp.

Indeed. Can I thank Suzy Davies for her questions? She makes a very important point about the collaboration that's taken place in Swansea bay between higher education and the steel making of the region, and also some of the spin-off companies and the supply chain companies as well. It's my understanding that that collaboration will be maintained. However, we will be seeking to engage with the company and the trade unions to seek further information about the detail of the announcement, to ensure that that collaboration continues into the future, and to ensure that we secure iron and steel making in Wales for the long term.

Now, I think it's worth saying, in terms of the time frame, the joint venture is subject to regulatory examination by the authorities that include the European Commission and, until closing, both joint-venture companies are going to continue to operate as separate companies and as competitors, but, during that period, we expect to be able to take forward our discussions over the support that the Welsh Government can give to Tata insofar as the Welsh-based operations are concerned, but I would welcome the announcement of an extension of the employment pact to 2026, with a commitment to seek to avoid compulsory redundancies as a result of the joint venture.

In terms of the other commitments, Tata has committed to invest in a life extension of Port Talbot's blast furnace 5, which will proceed this year. I think, in general, this is a very, very positive announcement for steel making and all of the associated steel sites across Wales. However, we remain committed to ensuring that the long-term future of steel businesses in Wales can be guaranteed.

I think the joint venture, on the face of it, seems like a positive step forward at the moment, but there are key questions to ask to ensure that we move forward with scrutiny and caution. Our first duty, of course, is to the workforce—the highly skilled workforce—that we have in Port Talbot. As I mentioned yesterday in questions to the leader of the house, Brexit is going to loom large in the prospects of the joint venture, and although the outlook right now, in the medium term, seems secure, our exit date from the EU is approaching, and this could, in fact, impact upon the joint venture. Last week, Heinrich Hiesinger—I'm not sure if I said that right—chief executive officer of Thyssenkrupp said, regarding the effects of Brexit on the JV, and I quote:

'We hope that whatever the outcome, there will be a free market.'

Of course, we can't guarantee that there will be a free market, with the Conservatives and your party needing to answer questions still on this on a UK Government level, and seeming to be blocking a free market or obfuscating it. So, I think we need answers on that.

I'd like the Welsh Government to outline what case they will make to the UK Government also regarding state aid and other industries, because Wales could be in a different environment in the future, with the UK Government redesigning those rules post Brexit under powers returning from the EU, and I believe there should be a more clear position on that at this date.

So, as I've said, over all, I would want to bring some security to the sector in Port Talbot. I know it's up until 2026, but I think that that is a medium-term goal and that we should all be keeping our eyes on that, and to reiterate that the investment in Port Talbot is key now, and I hope that the money going forward on the other phases of the agreement between Plaid Cymru and Labour in that regard will be able to go ahead smoothly because I do know that there were some teething problems to more funding getting their way. If we could avoid that so that the steelworks can be utilised and developed for the future, then that would be beneficial to everybody in this room and in our communities across Wales.

Can I thank the Member for her questions, and begin by saying that my party here, and in the UK as a whole, couldn't have demonstrated a greater commitment to sustaining steel making in the UK? We've been absolutely determined to influence the UK Government, and to influence the company in terms of long-term investment, and the work that we've invested in this area, I think, has paid dividends, and the announcement demonstrates it.

With the exception of the funding—and the Member rightly points to the support that the Welsh Government has been able to offer to Tata—I can say that, with the exception of funding for skills support, Tata won't be able to draw down funding against these offers until we have agreed the detail of overarching, legally binding conditions, and I would expect all Members to support that. We need to make sure that those conditions apply for several years, and that they are, indeed, legally binding.

Now, in terms of Brexit, we'll continue to work closely and constructively with Tata in terms of planning for the challenges and the opportunities presented by Brexit, but, to date, the Welsh Labour Government has offered £8 million towards an £18 million investment in the power plant at Port Talbot, and we continue to discuss the potential for further investments to increase efficiencies in this area, and I think it's worth reflecting on the important point that the Member makes concerning state aid rules. Well, until the UK has exited the European Union, of course, Welsh Ministers remain bound to comply fully with EU state aid rules, and any support provided to the steel sector must be given in accordance with EU state aid rules. However, post Brexit, whether and to what extent Welsh Ministers would continue to be bound by the EU state aid rules will depend on the terms of the withdrawal agreement that the UK negotiates with the EU. But it's absolutely essential that, during the course of the negotiations that are continuing, the UK Government recognises the importance of steel making to the UK.

Thank you to the Cabinet Secretary. The next question will be answered by the Minister for the Welsh language, and the question's from Dawn Bowden.