The long-term future of steel in Wales can only be safeguarded through public ownership, says Plaid Cymru.
The party is calling on the Welsh Government to ensure that the operations of Indian-owned Tata Steel 海角视频 are returned to public ownership as a first step to developing an alternative strategy seeing the primary steelmaking plant at Port Talbot becoming carbon neutral by 2035.
Plaid Cymru leader Adam Price said public ownership, with recapitalisation to fund an eventual move to hydrogen-based steel production via the issuing of green bonds, was the only to secure the long-term future of Tata's operations in Wales, which collectively directly employ around 7,000, but support thousands more jobs in the wider supply chain.
Mr Price said that after a period of stabilisation a publicly-owned operation could become a not-for-profit co-operative ensuring that workers and steel communities had a "seat at the table."
It comes after the parent company of Tata Steel 海角视频 in Mumbai last week confirmed that while it is exploring options to ensure the long-term sustainability of its 海角视频 business, it was no longer prepared to provide financial assistance to the loss-making venture; which continues to suffer higher energy costs than competitors in mainland Europe and the challenging backdrop of global oversupply for steel, fuelled in particular by the Chinese.
Tata has been in discussions for months over a financial lifeline of £500m under the 海角视频 Government's project Birch initiative, which was set up in the wake of the pandemic to provide support for larger employers in sectors deemed of national strategic importance, such as steel. The only beneficiary to date is Spanish-owned recycled steel venture Celsa Steel, which employs around 800 in Cardiff.
First Minister Mark Drakeford last week called on the Prime Minister to urgently act to ensure a funding deal, which could see the taxpayer taking an equity stake in Tata 海角视频 Steel, was swiftly agreed. Without a deal, coupled with the turning off of the financial support tap from Mumbai, there are concerns over the viability of the business.
Tata has also confirmed it is splitting its European operations into two distinct businesses, while announcing that its Dutch steel operation could be sold to Swedish steelmaker SSAB — although at this stage no formal offer has been tabled. If a deal fails to materialise the 海角视频 and Dutch businesses, which currently come under Tata Steel Europe, will remain separate entities.
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This has raised additional concerns over Tata Steel 海角视频's access to R&D functions currently located at the Ijmuiden plant in Holland.
The 海角视频 business employs around 8,300. Of the 7,000 employed in Wales some 4,000 are at the Port Talbot, with the remainder at down stream operations including those in Shotton, Trostre and Llanwern.
Mr Price said: "Tata’s announcement over the weekend caused great anxiety for the communities of Port Talbot who have kept the fires of our economic furnace burning for many decades.
“The only secure and sustainable future for Port Talbot and the other Welsh plants in the long run is to return the ownership of the Welsh steel industry to Welsh hands – and ensuring that our workers and their communities have a seat at the table.
“To nationalise as a first step and then recapitalise through the kind of green bond advocated recently by the OECD and then finally to mutualise and create a Welsh Steel Co-operative. Dwr Cymru [Welsh Water] has been a success so why not Dur Cymru [Welsh Steel]?
“History has taught us that we cannot rely on Westminster to solve Wales’s problems. When Wales does things differently, it does things better. Now is the time to show the difference that having our own government can make by bringing forward a counter proposal to protect jobs and livelihoods in Port Talbot and the surrounding area.
Plaid has not indicated what it would be prepared to acquire the business for. Although if it took pension liabilities and say any future remediation costs for the Port Talbot site, it could potentially acquire and nationalise the business for a nominal fee.
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However, it would require significant investment to move the operation to a carbon neutral one , with significant ongoing financial support too to achieve the first base of a break even financial position.
In its last financial year (year to end of March, 2020) Tata Steel 海角视频, a subsidiary of Tata Steel Europe, saw its losses widen to £654m, with Tata at the time saying the economic uncertainty caused by the Covid pandemic could cast a "significant doubt" on its ability to continue as a going concern.
It had a total borrowing exposure of £827m, compared to £2.6bn a year earlier. The reduction was supported by just over £1bn owned to the parent company being converted into equity.
Following the pandemic in March, its sales of steel products were down around 20%, but have since picked up strongly in some markets.
Economy Minister Ken Skates said he and the First Minister had held talks with CEO of Tata Steel Europe, Dr Henrik Adams, following last week's announcements.
Mr Skates said: " Dr Adam explained that Tata Steel is determined to find a sustainable future for operations in the 海角视频 and to safeguard the workforce. He also made clear the creation of a 海角视频-only operation marks a critical point for the business.
"We must take this opportunity to create a sustainable, secure and successful footprint for Tata Steel in Wales. One that is aligned with our low carbon aspirations, is truly fit for the future and ensures that we maintain our indigenous steel sector here in Wales and the 海角视频 for the long term.
"Significant support is needed, particularly investment, but we are clear that the steel industry in Wales, with the right internal market conditions, can have a sustainable and successful future."
However, Mr Skates said that only the 海角视频 Government has the capacity to provide the scale of support required. He added: "Proactive and rapid support would represent tangible action on the ‘levelling up’ agenda and demonstrate the 海角视频 working for Wales at this critical time.
"In addition it is important to emphasise that a no-deal Brexit would be extremely damaging for the 海角视频 steel sector and it is therefore vital that the 海角视频 secures a comprehensive trade deal with the EU with tariff free access to EU markets."