The town has a chance, if it can exploit valuable reserves of "coking coal"by Rhodri Morgan / January 22, 2016 / Leave a comment
Last year saw the closure of steelworks in Redcar and Scunthorpe. Now the steelworks in Port Talbot, Wales—like the Scunthorpe works also owned by the Indian company Tata steel—is facing 750 job losses, about 20 per cent of its workforce. Though the steelworks produce different products—Scunthorpe is a “flat products works” specialising in sheets of steel for car bodies and washing machines, while Port Talbot specialises in “long products” like rails—both sets of job losses will be devastating for the workers concerned.
Port Talbot, like Scunthorpe, is steel town. (Notwithstanding its claim to fame in producing three world class actors: Richard Burton, Anthony Hopkins and Michael Sheen.) Economically it is totally dependent on the steelworks. That’s why the loss of 750 jobs will hit so hard. Those jobs, paying good wages, are difficult to replace in a town than knows little else. It is, in a sense, a microcosm of what has become known as the “Welsh problem.” Half a century ago there were 100,000 coalminers in Wales and 75,000 steelworkers; now there are only 1,000 coalminers and 7,500 steelworkers.
Finding replacement jobs on that scale has been an uphill task for successive governments. And it may yet get worse: everyone is wondering whether the Port Talbot works will survive at all if China’s steel surplus continues. As China’s economy has started to slow down its oil prices have fallen dramatically.—but far less notice has been taken of the global collapse in steel prices. We use “hot rolled coil” as a marker price for steel, and its price has plummeted from £600 to £300 per tonne.
Port Talbot is our country’s biggest steelworks and can produce 4.5 million tonnes per year. Some readers may have seen the grainy black and white Movietone News images of Hugh Gaitskell, then Chancellor, officially opening the redeveloped works in 1951. Back then it was a triumph of post-war regeneration.
But the works should have had a warning sign outside: “Rest on your laurels and you will soon get overtaken.” Yes, it produces 4.5 million tonnes annually, but outside the UK seven million tonnes is now normal. Altogether Britain only produces 10 million tonnes per year; China produces 850 million.…