5. What discussions has the Minister had with UK Government counterparts on protecting the future of the steel industry in Wales? OQ59034

The First Minister and I continue to engage with our key counterparts in the UK Government. I met with Ministers from the Department for Business, Energy and Industrial Strategy last week, when I raised steel as an issue. We also engage with senior representatives of the steel sector in Wales, on both the business and trade union side. We continue to believe, in the Welsh Government, in the importance of securing a sustainable future for the strategically important steel sector in Wales as part of what should be seen as sovereign UK capability.

I'm grateful to the Minister for his answer and, also, to the Welsh Government for their continued support for the steel industry in Wales. The Minister has joined me on many occasions at Shotton Steel in my own constituency, which proves that you understand the importance of Welsh steel and you understand the importance of Shotton having a supply of green steel.

Minister, industry partners like Tata Steel and the trade unions, such as Unite the Union and the Community union—and I declare that I'm a member of both trade unions, Deputy Presiding Officer—have both been calling for the UK Government to invest in the sector through ensuring that energy prices are competitive with competing nations and, also, to invest in the decarbonisation of plants. Now, the £600 million offered by the UK Government is simply not enough; that was the clear message of concern during the cross-party group on steel last night. We know that you'll be joining the cross-party group on steel some time in future. We're yet to hear from the Prime Minister, or the last three Prime Ministers, in response to our letters, which, perhaps, is no surprise. But, Minister, will you continue to lead calls for meaningful investment from the UK Government in the Welsh steel industry?  

Yes, I'll certainly do that. And it's not just about meaningful investment, but you're right to point out that the industry itself recognises that it needs to chart a path to decarbonisation for a sustainable future. But, to do that, we shouldn't simply collapse our own capacity within the UK and end up importing steel without understanding the carbon footprint of steel produced in other parts of the world. This is a set of questions that will affect other Members in the Chamber. I see both Newport constituency Members with an interest in what's happening with Liberty; the Deputy Presiding Officer can't speak, but he's obviously got a significant interest too.

What we have been calling for is to get us to that greener future for steel production, and to recognise that it's important for a range of industries today. That means action on the high costs of energy compared to European counterparts. That also means action on scrap exports. We export millions of tonnes of scrap metal every year; we should be keeping more of that in the UK for our steel sector. We also want the UK Government to partner with the industry to chart out some of the challenges over capital investment. We also want to see investment in hydrogen as an alternative for blast steel technologies in the future, rather than seeing all of that take place in other parts of the world.

So, there are direct jobs, there are dependent jobs in the supply chain, and, of course, large industries, whether it's construction or manufacturing, that are reliant on steel, including the big opportunities that exist in marine energy and floating offshore wind. I want to see British and Welsh steel in those products in the future, and that requires a different approach from the UK Government. A £600 million offer between two companies isn't going to get us where we need to be, but at least there is an offer for us to work with, and hopefully see an end result that all of us can celebrate and be positive about. 

Minister, we all accept the need to decarbonise our steel industry. While the funding being offered by the UK Government to Tata to move to electric arc furnaces is welcome, an alternative has emerged in the past few days. Scientists at the University of Birmingham have developed a process to radically reduce emissions from a traditional blast furnace. This technology converts carbon dioxide into carbon monoxide that can be reused in the iron ore reaction. In this process, the typically damaged carbon dioxide is turned into a useful part of the reaction, forming an almost perfect closed carbon loop, and reduces emissions by around 90 per cent. Minister, will you work with the UK Government, Tata and Birmingham University to explore further whether this approach could enable Wales to retain its sovereign steel production activity? Thank you.

I'm seriously interested in maintaining that capability within the UK, and that will exist here. The challenge is that the £300 million offer for Tata to equalise the £300 million offer to British Steel—they're actually different scales of operation. And actually, that's about moving towards electric arc production rather than maintaining an alternative form of blast steel manufacture. The challenge really is around capital investment, and how quickly that can be deployed, and the window for doing so isn't infinite. It has been a regular conversation that, as I've said in response to Jack Sargeant, I've had directly with UK Ministers, the First Minister has had directly with UK Ministers and directly with steel firms and the trade union side as well. There needs to be a sense of urgency from UK Government on this, and I hope that the Chancellor uses the budget coming up in March as an opportunity to announce and agree something meaningful to give our steel sector the opportunity to invest in its future and our future, and as I say, to see this as a sovereign UK capability. If it does that, there should be good news for the workers here in Wales. 

Luke Fletcher.

Thank you, Deputy Presiding Officer, and thank you for your chairmanship of the cross-party group.

The reality is that much of the investment for the steel industry must come from the UK Government, and I'd have to join Jack Sargeant in saying that it is disappointing that there is a reluctance from UK Government Ministers to engage with our CPG. In fairness to you, Minister, I think this will be the second time that you've come to the CPG now, and I know Members are very appreciative of that.

We know that steel is important for reaching net zero, so, to this end—and you mentioned hydrogen use in blast furnaces—I would like to explore further how steel factors into the Welsh Government's approach to hydrogen. Of course, hydrogen may offer a way of producing low-carbon steel and secure the industry's future, and the risk, of course, is that if we don't look at hydrogen more, we may focus too much on recycled steel.

There are investment choices being made in Holland—it's not a secret—around hydrogen as an alternative to blast furnace technology there. The challenge is that, if we don't see action taken by the UK Government to engage in that conversation, because they will need to be a partner to make that work, then we would end up importing that steel from other parts of the world. Now, it doesn't mean that the steel sector doesn't exist without blast furnace technology. There's a part of the sector that wouldn't exist, and the challenge then is, could you persuade a future UK Government and future businesses to invest in importing that technology that is proven somewhere else? There's a real risk for us in doing so. I also think it's important for what our ambitions are for steel itself, how we see it as a real capability, and it would make a big difference to workers in the sector. So, we've been really clear and really consistent that we want the UK Government to be part of this. And if it did so, and if you had that major investment made in that alternative technology, it would help with hydrogen use and pipeline, and the incentive to generate green hydrogen—[Inaudible.]—to significant industrial clusters, whether in south or north Wales. So, there should be alternative gains to be made, but that does require a significant UK Government choice. 

You mentioned Liberty Steel, Minister, and the mothballing of that plant has understandably created a great deal of concern. You would know, Minister, that that industrial operation is very extensive, and has many opportunities within it, I think. You've got the power station there, the rail links and the rail head, its own dock and the scale of the site; it has great potential, and there's a deal of frustration that that potential isn't being realised at the moment. So, will you, Minister, work with Liberty Steel and possibly others in the future to make sure that the potential in that site is fully realised for economic development and jobs growth? 

Yes. I'm very happy to carry on working together with my officials, and the company, and counterparts in the UK Government if we can find an answer for the sites in both Newport and Tredegar. We want to see the steel sector have a healthy future. If we can't generate and produce that steel ourselves, we will end up importing it from other parts of the world, with greater risk in terms of price volatility, supply, and, of course, our understanding of the carbon footprint of that steel production. One of the positives is that the workforce are loyal to the site and to their workplace. There's a challenge there about maintaining that sense of unity. If we can help in securing an economic and sustainable future for the site, then I'm certainly happy to continue to work as hard as we possibly can to do so.