Port Talbot; strategic domestic manufacturing

Smoke rising from an industrial landscape at sunset

This is a guest post by Dr Jen Baxter, Deputy Chair of NICW

Tata’s closure

The news that Tata Steel will close both blast furnaces at its Port Talbot steelworks within the next 18 months and replace them with an electric arc furnace (around 2027) will significantly reduce the UK’s ability to be self-sufficient in the supply of critical infrastructure, as we will be dependent on imported steel.

It is Tata Steel’s employees and their local communities, however, who will feel the most devastating impact with a narrative from Tata Steel focusing on the need for emissions reduction, and a corresponding move towards a more circular economy.

The likely solution is to ‘offshore’ much of our steelmaking emissions and import materials previously produced at Port Talbot. This will drive up global emissions, as Port Talbot was one of the most efficient steelworks in the world.

The lack of foresight and support for this change in South Wales means that the trust between the Port Talbot community, Tata Steel, and the UK and Welsh governments has suffered a serious blow.

Having had some time to ruminate about steel manufacture in Wales, I wanted to share some ideas. The thread running through these thoughts is about creating positive opportunities for the people of Wales while decarbonising our industries. I will never be able to cover all the possibilities, but how we grow our circular economy in materials and energy will play a big part in delivering a Wales that is clean, green, prosperous and meets the needs of our future generations.

A cleaner future

I approach this problem from two different angles; although in this case of industry, environment and social action, they are all interrelated. Considering this it is still important to look at the Port Talbot problem through different lenses.

First, the technological lens. It is certainly true that arc furnace steelmaking is less energy-intensive and because it is powered by electricity, furnace emissions are reduced.

These are both positive outcomes. In south Wales we have a higher carbon intensity of electricity than many other areas of the UK and are making slow progress in decarbonising our electricity generation. The table below taken from the annual Energy Generation in Wales 2022 report for the Welsh Government shows how electricity from gas still dominates (1).

Electricity generation in Wales
• 43 MW of renewable electricity capacity was installed in 2022, down from 116 MW installed
in 2021. This is part of a decline in renewable electricity capacity installation over the past
decade, where at the peak in 2015, over 900 MW was installed. There is now 3,551 MW of
renewable electricity capacity in Wales.
• Renewable electricity generation in Wales has tripled since 2008 and doubled since 2012,
but has only increased by 11% in the last five years.
• Nearly 95% of renewable electricity generation in Wales is from large scale (>1 MW) projects.
• There has been no electricity generation from nuclear and coal in Wales since 2015 and
2019 respectively.
Electricity generation in Wales key statistics

For the new electric arc furnace at Port Talbot to be a truly green alternative, we need to generate or have access to significant amounts of low carbon electricity in Wales.

A major shift is needed in the delivery of renewable energy in Wales; the National Infrastructure Commission for Wales recently published a report on how to accelerate the delivery of renewable energy (2). In the future Wales will likely have access to electricity from Hinkley Point C from approximately 2029 if current estimates for the new reactors coming online are met (3).

Access to low carbon electricity is not an insurmountable problem, and by meeting our ambitious targets for renewables in Wales, we can make some progress. However, this requires access to manufacturing, the engineering skills to deliver localised energy systems, skilled technicians and engineers, and a suitable investment ecosystem to make it happen.

A second technical element to consider is steel production. Tata have stated that scrap-based steelmaking is best for their UK market (4).

It is possible to make most steel products using recycled steel and around 30% of scrap steel is used to make ‘virgin’ steel, much of which is recycled through the steel making process. So why are there concerns about the use of recycled steel?

In the most basic terms, it can be difficult to manage contaminants such as copper and tin in recycled steel with complete confidence. This means that the quality of the steel can be compromised, which could lead to failure of the steel in use.

There are certain applications of steel where material failure arising from the manufacturing process is unacceptable, and extra care is taken when selecting steel products. This problem is not unique to recycled steel; problems with contaminants in recycled plastic can cause similar failures.

It doesn’t follow that there is no solution to the problem of contamination in recycled steel, but new and emerging technologies that accurately measure contaminants in steel are decades away from commercial availability on a large scale, and our metal recycling industry in the UK is fragmented.

In addition to the challenge of contamination in the recycling process, there is a more fundamental problem which is the availability of scrap steel. From a purely south Wales point of view, we have an electric arc furnace at Celsa Steel in Cardiff that uses 100% scrap steel brought in by road and rail, which means competition for the source material.

If we expect efficiency, design for disassembly and circularity to become the norm in manufacturing and construction in the future, it is likely that higher quality scrap, of lower volumes, will be available throughout the steel value chain.

This could lead to a shortage of materials and an increase in the cost of scrap and manufactured products after recycling. There are examples of the impact a diminishing supply of waste can have where it is used as a feedstock in countries that use their waste effectively, a good example being energy from waste plants in Sweden which have struggled at times to have sufficient waste for district heating schemes (5).

Alternative fuels?

Options for the use of alternative fuels in blast furnaces have been proposed and are worthy of brief consideration. It has been suggested that up to 70% of the world’s blast furnaces will need to be rebuilt and modernised by 2030 (6). All blast furnaces have a lifespan, and the question is what we do when they are due to be decommissioned.

Natural gas has been used in some blast furnaces around the world to reduce emissions and dependence on coking coal, a very dirty process that we should be moving away from. It is likely that biogas could be used in the same way and with a more coordinated approach to biogas production and sufficient supply, this lower carbon fuel could be used in blast furnaces here in Wales.

Hydrogen as a blast furnace fuel has been proposed to produce ‘green’ steel and, like other gases, could replace coking coal in blast furnaces, a solution put forward by trade union leaders on behalf of the steelworkers at Port Talbot. This may sound like a straightforward solution, but there are some tricky factors when considering hydrogen as a fuel for steel. The first and simplest is the supply of fuel (again), and when it comes to green hydrogen, the challenges of supplying renewable electricity and reliable electrolysers of sufficient size for the needs of a blast furnace are not a near-term solution.

The use of grey hydrogen, produced by steam reforming of natural gas, and then blue hydrogen, with carbon capture and storage, is perhaps more realistic, but the question of why you would do this without capturing the carbon may prevent progress in the short term.

Other differences in the use of hydrogen are in the form of temperature. Hydrogen burns at high temperatures and creates a damper atmosphere. These challenges can be overcome, and careful design of these new plants will be critical.

Challenges for hydrogen

Finally in this group of hazards is the possibility of hydrogen embrittlement. There have been failures of steel bolts and other fasteners where hydrogen embrittlement has occurred, and the source of the hydrogen has not been identified (7). As the presence of hydrogen in steel production increases, the management of hydrogen throughout the processing of steel becomes critical. As mentioned above, there are applications of steel where product failure due to the manufacturing process is unacceptable.

To end this section on a positive note, hydrogen will have a place in future manufacturing, but it must be targeted for the most efficient use. It is an expensive fuel that must be extracted from compounds such as water and methane, making it the VIP of fuels.

Social issues

Next, I let’s look at Port Talbot through a social lens. Questions will and should be asked and answered as to why steel production in Port Talbot has become economically unviable. There has been a steelworks in Port Talbot in some form since 1901 and various incarnations have been built, closed and rebuilt on the site up to the present day.

The kind of investment needed in a site to keep it up to date and move towards net zero is significant and, as history shows, there may be a case for closing a site and rebuilding a modern steelworks for the second half of the 21st century, whether there is an electric arc furnace onsite or something else.

Running alongside the challenges of inflation, cheaper imports and the UK’s emission reduction ambitions are new tariffs for imports into the European Union. The Carbon Border Adjustment Mechanism (CBAM) came into force in October 2023 and has just come to the end of its first reporting period for importers. This new tariff aims to put a fair price on energy intensive products entering the EU, this includes steel and other metals. It is likely that this would have added to UK steel manufacturers’ woes, but it wasn’t unexpected news and could have been managed with good foresight and preparedness (8).

Much can happen in the proposed gap between the closure of the blast furnaces and the delivery of an electric arc furnace at the Port Talbot site: changes in investment strategy, inflation, construction costs, availability of electricity and scrap, demand for steel and the local skills base. We need to ensure that as a nation we have contingency plans and manage the risks effectively if we are to have a chance of competing in a slow growth economy.

With all of the above in mind, the question of why we have manufacturing in the UK becomes in important, are we purely a market driven economy, in which case we can imagine the loss or lack of emergence of many industries, or are we a nation of innovators where security of supply of materials, domestic manufacturing and infrastructure adaptation alongside sustainability are skills we value? If the latter there is a role for greater strategic planning across all four nations with a clear vision for the future of our society allowing governments, businesses and the communities they support to make investments that lead to that future.

But the story of Port Talbot isn’t just an economic, emissions or manufacturing story, it’s a human one. Throughout the Industrial Revolution and beyond, manufacturing processes have breathed their last and been consigned to the history books, many of them accompanied by social unrest. Wales has seen its fair share of these changes.

If we look at this in a net zero sense, it is true that the closure of the blast furnaces at Port Talbot will reduce Wales’s emissions by up to 15% and the UK’s by 1.5%, so a big deal in terms of emissions. But it comes with the loss of 2,800 jobs in a community that has grown up around the steelworks over the last 130 years, with no alternative industries to support that number of jobs.

The Just Transition

Bear in mind that while the UK is reducing emissions by 1.5%, we are in effect offshoring the emissions as the gap in production is filled by a steel producer from another country. This is not what is called a Just Transition.

A Just Transition is not a clearly defined outcome, but in its simplest form it seeks to ensure that the benefits of the transition to a low carbon economy are widely shared and that those who lose out economically are supported. It is easy to see that this is not the case for Port Talbot.

It has been clear for many years that the Port Talbot steelworks has been gradually reducing its workforce and activities and, despite watching this happen, the Welsh and UK Governments have not used any strategic foresight practices to implement changes in this region that would counteract these disastrous changes for the community.

Wales is full of great ideas and opportunities, such as the South Wales Industrial Cluster, now known as Net Zero Industry Wales, the Wellbeing of Future Generations Act and the new ‘Trydan Gwyrdd Cymru’ renewable energy development company (9), but even with all this knowledge our ability to predict and create a reality where we do not lose the expertise of our steelworkers and supply chain elsewhere is poor.

It will not be possible to quickly undo the damage that the recklessness and lack of preparation surrounding the closure of the blast furnaces will do to Port Talbot, but there is a glimmer of hope that with good planning, UK teamwork and determination, Wales can take advantage of the space where the circular economy meets steelmaking and manufacturing.

Wales is proud of its recycling rates and by planning and, crucially, delivering a high-quality steel recycling sector that is coordinated, fully integrated and linked across Wales and the UK, Port Talbot can continue to be the UK’s major supplier of both low carbon and recycled steel. As long as the UK and Welsh Governments recognise that steel production is of national importance to the country’s manufacturing and infrastructure sectors.

Dr Jenifer Baxter
Deputy Chair National Infrastructure Commission Wales

Declarations of interest

Non Executive Board Member, Industry Wales
Non Executive Board Member, Newport City Homes
Brunel University Hydrogen Team


  1. Energy Generation in Wales, Welsh Government, 2022
  2. Preparing Wales for a renewable energy 2050, NICW, 2023
  3. EDF’s UK Hinkley Point nuclear plant delayed again, costs mount, Reuters, 2024
  4. Tata builds vast India furnace despite Port Talbot emissions claims, The Guardian, 2024
  5. Sweden’s 90% recycling, RWSP, 2016
  6. A make or break moment for steel, FT/PWC
  7. A Failure Analysis of Hydrogen Embrittlement in Bridge Fasteners, Corrosionpedia, 2018
  8. Carbon border adjustment mechanism, EU
  9. Written statement; update on Trydan Gwyrdd Cymru, Welsh Government, 2023

Photo: Mike Erskine