Energy and Climate Change CommitteeWritten evidence submitted by Tata Steel (SEV 21)
1. Our Role in the Regional Economy
Tata Steel has several major operational sites in Wales, employing over 7,000 people. A recent study carried out by Cardiff University’s Business School has demonstrated that the company’s network of suppliers, contractors and business partners extends the employment dependency to a figure over 18,000 in Wales alone. Key Tata Steel sites outside Wales, such as the substantial operation at Corby are dependent on the South Wales operations for feedstock. Formally designated an “Anchor Company” in Wales, we are committed to sustaining our industry here, and our major capital investments programme—at over £300 million in the last two years alone—is firm evidence of the company’s long term stake in the region.
2. Summary of our Position
Further investment in the Welsh operations will be driven by their (potential) competitiveness, addressable demand for steel products and the infrastructure (physical and regulatory) of the surrounding region. The proposed Severn Barrage Project may have a major impact on all of these factors. Therefore Tata Steel has a deep interest in the considerations around the project.
3. Competitiveness of the Steel Industry in the Region
Our industry is energy-intensive and this cannot be avoided. A secure supply of sustainable, competitively priced energy plays a major part in defining the competitiveness of our operations as a whole. We have made great strides in optimising our energy management through both major investments and practical management, but any development, which positively affects the stability of price and the base-cost of energy, could be critical to us. This point is even more forcefully made in the context of our current position in which we find ourselves currently carrying an additional cost burden of up to 60% above similar operations in mainland Europe.
4. Clarity about the Energy Outcome
Given this context we would welcome a dialogue with the Project developers and the Welsh Government about what impact the Project may have on electricity pricing and what role there could be for substantial local off-takers.
5. Management of the Project Supply Chain
We have stressed to the UK government for a long time how vital it is that the Government ensures that it maximises the benefit of major public projects for the UK community. The project will demand steel products and services, which can be supplied in the UK by companies like Tata Steel Europe and others which have a major role to play as a foundation for the UK economy. A project of this scale, scope and impact must be driven by an overriding principle that public projects are dedicated to the maximum service for the community. A working group must be established to define the procurement parameters to ensure indigenous suppliers of products and services are first-choice participants.
6. Impact on Regional Infrastructure
An efficient and low-cost transport infrastructure is vital to the steel industry. Annually, Tata Steel imports some 2.5 million tonnes of iron ore and an equal quantity of coking coal to Port Talbot. The industry is, by volume, the largest user of the Welsh regional rail and road system. Operating at full capacity, the company distributes some five million tonnes to customers in the UK, mainland Europe and further afield, every year. The ancillary developments to the deep water harbour, rail and road infrastructure—and their effects on availability and costs—will play a part in our developing business strategy. We would therefore welcome a dialogue with the Project developers and relevant other stakeholders to discern how existing infrastructure can be developed to minimise disruption and maximise benefit for the region as a whole.
November 2012