Welcome to this meeting of the Scottish Affairs Committee. This is part of our industrial inquiry and this morning we are going to be looking at defence and steel—or steel more generally, with a little bit of defence, I suspect, thrown in. I will begin by asking about the prospects, given that BAE Systems, for example, has just won this massive £10 billion contract to supply Norway with a number—at least five—of new Type 26 frigates. Do you think that the Dalzell steelworks is in a position to capitalise on that defence uplift?

Dalzell has been supplying into BAE since 2017, when the British Type 26 frigates started. From there, we have put in for the British and some for the Australian orders as well. There is always a possibility, if there is investment and you can upgrade Dalzell, that we can do more, but we have been and we would hope to continue supplying plate with the Norway ships.

I am glad to hear it. Ms Murray, do you want to add anything?

For me, I look at things a little more strategically at a UK level. It feels like we are at a crossroads in the steel industry. There is this moment where, when we see the defence strategy being announced yesterday, for example, we need to look at what the capabilities are across the UK and in Scotland, so that we can take advantage and leverage our skills.

Would you be anxious that we might lose some of those contracts to overseas companies?

Yes, definitely, just from the financial point of view of it. We do not have a level playing field as we stand at the moment regarding energy prices and other support. Countries have been undercutting us quite a bit and it comes down to price at certain points. There is always that fear that a lot more will go abroad.

Are there any particular countries that would be competitors?

I would say your Spanish companies that have been supported from their Governments and have been investing. We have seen that. Navantia has the contracts for the fleet supply ships, and that has been a really good model for them. They have come up and been supported by their Governments, whereas in the UK we have just had a long line of nothing. There has been no steel strategy and no defence strategies. It is not joined up in the same way as in other competitor countries that have actually seen the potential, so it is a worry.

We know that Dalzell has secured this £1.6 billion contract to supply steel for the fleet solid support programme. To what extent does that contract help to secure the long-term future of Dalzell?

It is a start. As you will know, Dalzell has not had any orders for the past year, due to economic factors. It will start us up. It is a baseload. We need more—you cannot rely on that one contract to keep everything going—but it shows that we should be investing in our UK supply chain. You have Scunthorpe, which has now been saved through the great legislation—unprecedented legislation—that kept our last blast furnace. You have Dalzell, which makes the plate from Scunthorpe. Then you have Harland & Wolff in Appledore. That is the perfect model, but you need further investment to keep that and make us more competitive in the wider market.

There are a few global trends that we see in steel that will be helpful as well, because it is not just a request for investment by Government. There is always a persistent overcapacity in steel. It is happening now. That is because, when things get difficult, steel becomes that very strategic material. It is ubiquitous, but it is also very complex, so there are specialist applications into defence, shipping and even aerospace and space, believe it or not. These grades become very key and critical. Scunthorpe, for example, supplies rail and the whole of Network Rail going forward. You can see why, politically, countries invest in their steelworks. It has come to a bit of a point where we are at this crossroads and that is the bit where persistent overcapacity leads to anticompetitive behaviour and dumping, potentially at very low prices, even lower than the cost you have made it at. There is also quite sluggish demand and there are decarbonisation pressures on the whole industry. Legislation has pushed towards things such as BREEAM “excellent”, so construction steels, for example, need green in there as well. You have this macro environment that is pushing and you can foresee the impact on Dalzell and other steelworks.

What further steps are needed to ensure the viability of Dalzell?

We were mothballed in 2015. We had been part of the whole Tata Group. Unfortunately, Tata decided to mothball quite a few of the plants and sell off at that stage. Really only because of the multi-union taskforce at the time, Dalzell was saved, but the fundamental thing was that Dalzell was shut down. That meant that, for the past 10 years, we have been trying to get all our accreditation back. You have a company that was the size of British Steel, Corus and Tata—it was huge—and you now have Dalzell on its own, trying to get everything back. We lacked a development department. You think, “Steel is just about metal, is it not?”, but there is an amount of accreditation and testing that you have to have. Fundamentally, it affects us all and has to be really good quality. We only have our accreditation for where the orders have been so far, which makes us look as if we are not capable, but we are. It is just getting all that accreditation back in-house. For a start-up business, we have lasted 10 years on our own. I know that the media portrays us as just taking money, money, money and all that kind of thing, but we really need to grow and get back to where we were. If you look at the North sea in the 1980s, we were churning plate into that 24 hours a day. We put over a million tonnes into the North sea. We built the North sea. The amount of plate that we put in was probably the equivalent of, say, 70 to 80 road bridges. It was plate from here to Canada. That is how much we put into that. If you look up there now, the biggest change being put forward by the green agenda is all those wind turbines. You would be hard-pressed to find any plate in there. We do not have a fabrication plant in the UK for that. If you are relying on China and Korea to make your towers, you are not going to take plate from a small plant in Scotland, are you? It is galling, if you think about a green transformation programme: when we were supplying the North sea, which is now the dirty industry, apparently, it was 200 miles from casting to fabrication, and now it is 12,000 miles. It does not make sense. To bring us up to speed with what is needed in the market, that is what we need.

For me, Scotland is part of a UK play here. We were talking about those crossroads. Angela is absolutely right: an economy of scale is needed in steel, so that you can share the knowledge for your quality departments and your product development departments, to keep your costs low and really competitive. The bigger you are, the more easily you can achieve that. With the legislation that this Government have brought in, you start to think, “Those could be shared, and we could do things very differently”, especially because the demand for steel is not predicted to drop massively. In fact, with that transformation, demand for grid steel, offshore wind, onshore wind and different steel products is not dropping. It is not that the markets have gone. Also, with geopolitical instability in the global steel markets, we are seeing a regionalisation. We are seeing the far east, the Americas and Europe starting to become much less open to shipping very long supply chains from around the world. There is a moment here where we can take advantage of what is left in the UK and our intellectual capital that exists. We know how to do those things, but we need to work together. For me, the steel strategy that is coming forward is going to be the interesting thing from Government.

That is very interesting.

Given the current size and financial sustainability of Scotland’s steel industry, do you think Scotland’s steel industry could be financially sustainable?

Yes, definitely. With the amount of orders that are out there, it is criminal that they are going elsewhere and we are being overlooked. We have had all these steel strategies. Everybody has taken their picture and said, “We’ll use UK content,” but who is actually looking at that? There is always a way around it. You are seeing big cargo vessels coming in with steel dumping—it happens every day; they are coming across the ocean or whatever and landing here. When people are bringing in fully finished product cheaper than we can buy slab from Scunthorpe, that is not right. It needs to be tightened up. We are not looking to take every single thing, because of course we are a niche market at the moment within Scotland, but we are not getting a look-in. We are absolutely not getting a look-in. We work in the technical department, so we see all the offshore orders and everything coming in, so all the wind farms, buckets and transition pieces, which should be perfect for us. We must have tendered hundreds and won nothing. That cannot be right: you are sitting in a country, you look at where the work is going to be and you cannot compete with something coming halfway across the world. We have said that there is not a fabrication plant here, which is criminal in itself, but it is the buckets, the fundamentals that would be round it and the transition pieces that hold it all together. Big bits of plate are needed and you have a heavy plate mill just sitting there that could be doing this for your green projects, so yes.

Do you know whether, when British Aerospace or Babcock are buying steel for, say, the Royal Navy, they have any environmental requirements on the producers of that steel?

They probably do. I would not know the fundamentals of it. Every project has that thing, but, if you look at it just now, it is very high level. It will be the person they are buying from directly and that person would be a huge company. They would be saying, “Yes, we are doing this. We are putting a playground in here. Yes, we are supporting that”. We are right at the bottom of the supply chain. It is the fundamental part at the start. That gets lost along the way. They will say things like, “Capability? Dalzell’s not got it”. They do not come and ask, “Can we work together or can you get yourself accredited to make that?” For the Type 26, yes, we have the steel capability to do that.

I am not a defence contract specialist for their environmental regulation, but the sectors that really drive on that will be construction—where you see BREEAM—automotive, because it has an LCA, or life-cycle assessment, approach, and offshore wind. Those projects are otherwise accused of greenwash, so there is a lot of drive—regulatory but also commercial—to use steel that has come from a lower carbon intensity. It is less so for defence, so my guess would be that that is a lower requirement, but they would expect you to have ISO 14001, for example, which costs money. You do at Dalzell.

Yes, we do.

It costs staff to run and deliver that, but gives you environmental and business benefits.

This is a second question, but it is not directly related to the first one. What lasting impact has the closure of previous steelworks had on local communities?

It is absolutely devastating.

It is a big question.

It is. The biggest one probably in memory is Ravenscraig. For 35 years, it was the biggest brownfield site in Europe. What do we have? We have a college, a sports centre and a handful of houses. It was marketed that this would revitalise the area. It has not. It is probably one of the most deprived areas left. You will see that across Scotland where your shipbuilding went, your automotives and everything. The annoying thing is that it is a cycle. We see it happening, but we do not actually improve. There is the just transition that we are all supposed to be going through with the oil and gas. Nobody seems to be taking on board how badly we have done with all the other stuff and trying to improve it for them. We are great at talking about this just transition and saying, “We need to move forward”, but we are not. Motherwell in particular is definitely deprived. People have lost their livelihoods. You have lost the biggest employer in that region—and it is almost self-worth as well, isn’t it? People were proud to be part of British Steel. They were proud to be making the foundations. We make a bit of plate, which is just a bit of metal to most people, but then I can say, “It went into the Angel of the North. We went into the approaches to the new Forth Road Bridge”, and things like that. Economically, it is devastating when big industry goes.

You might be interested to know that, as part of the Committee’s work, we are doing an inquiry into GB Energy and just transition. In the course of our discussions we became very interested in the fact that perhaps in the past industrial transition has not worked. Part of what we are doing in this inquiry is looking for those problems that have been caused when it has not worked and trying to learn the lessons. It is maybe something you would be interested in at a later date.

Both witnesses have already talked about some of the major challenges that British steelmakers have faced in recent years. I think I am right to say now that four of six British steel companies are receiving taxpayer support or taxpayer subsidy of some form. To what extent do you believe that public intervention is necessary to sustain the steel industry in the United Kingdom?

My background is a little unusual: I have worked on pretty much all the steelworks in the UK at some point and also regulated them from an environmental perspective. Also, I got to run and pick up a Government intervention into propulsion systems for automotives—I ran the Faraday battery challenge—so I have very strong beliefs on when and where Government should or should not intervene in something of this scale. We need to make sure that there are market failures. I will describe the market failures for blast furnaces, for example. You can see that your markets are transforming to green steel, more advanced steels and so on, but your capital investment levels are so vast and your timescales are devastatingly short. That is what has caused your absolute market failure. Market failure for me is really important, but you should also have a burning platform. You should need to intervene at that time. That is exactly where we are at the moment. We have Liberty Steel mothballing plants and not operating. We are in this moment where our knowledge, know-how and ability to make steel needs that really significant strategic investment by Government and thinking. It is not a case of just throwing money at it, but you start to look at an ecosystem that can support it. When you look at that, you start at the research and the universities. We have a huge research community in steel in the UK. That is your early technology readiness levels, where you get it to the end of your laboratory bench. Then we have development and take that, working with people such as Angela, into trials on plant. You get that into markets, where you are bringing forward cutting-edge work. That level of thinking is absolutely critical. There is not a black-and-white answer but, as you are doing that, you start to build and get into the point where you know better where you are going. You have seen that with gigafactories being secured into the UK. There is 55 GWh coming to the UK on the back of taking an ecosystem approach. It also allows you to use Government as it should be used, as a centralising, co-ordinating factor. When you then get to regulation or standards, which is what you were talking about, Government can help co-ordinate and transform that industry. Do I think it needs Government intervention? Absolutely, yes. Do I think it needs a really strategic, well-thought-through plan? Yes, absolutely.

Can I follow up on that? For most industries that were receiving taxpayer support, I would consider that unsustainable. I was kind of expecting the answer that there is a strategic nature to this and a geopolitical angle, so in the medium term it is probably required. I think you have argued there that it is a significant strategic one-off injection, perhaps, or more limited support, not necessarily in the medium term. Am I misunderstanding you slightly?

You have to start there. If I look at Faraday, that was the auto council—I assume that we are going to talk about the Steel Council at some point—and Government working together to work out what that one-off could be. There is an exit strategy, but the business case actually kept growing. The more you could do, the more you could bring gigafactories into the UK, and the more you could protect jobs in making engines and transform them into making batteries in the UK. You could see and justify at every step why you were doing this. The battery improvement programme in the industrial strategy is £1.1 billion now, but there is an exit strategy to it. It is not an ongoing propping-up of an industry. It is looking at where it can go. When you talk to people such as Angela, who are on the shop floor and working with the actual kit, they know where the investment needs to go. When you can co-ordinate that, it is not easy and it takes civil servant effort and resources to do that as well.

I do not know whether you want to add anything, Angela.

Given the pivotal position that we are in with the move to green steel, it should not just be the companies themselves that are funding this. We need the help of Government to get through because it is vast amounts of money that are involved. There seems to be a line in the sand right before, “Turn the blast off and we are going to go electric arc”. We need this hybrid working between the two. We need to be moving and we need Government help on it, because the amounts involved in this transition time are absolutely huge. Liberty was really big on its green steel. Many reports looked into it, especially looking at the existing electric arc furnaces that we have down in Rotherham and investment needed in there to put in plate casters. As Jaqui said, the people within the industry know what is needed, but they really need the help to get it over the line, because this is not just a few pounds here. They need to know that there are orders at the end of it. That is where government help comes in, along with energy costs and stopping the cheap imports. It is not just that money must be thrown at the industry for no reason. We have a strategy. We are the ones who are working with it and know how to move forward and make us more green, but there has to be a bit of help along the way.

Good morning. As I understand it, operations at Dalzell are currently—you used the phrase—mothballed, with workers either furloughed or assigned to maintenance duty. Do I have that correct? I take it that no steel is being processed at present. Is that right?

At present, no, but we are imminently starting up because we have the fleet supply and that has a delivery date of the end of this year. We will be starting really shortly on that.

Before we move on to a potential start-up date, can I try to get an understanding of how we reached that position in the first place? What is your understanding as to the reasons why Scotland’s largest steel plant was mothballed?

It is Scotland’s only steel plant. From a company perspective, it was uneconomical to run for projects. Predominantly, we have stockholder business, which is then put on to projects, so we have not done a lot of final project work. When they can bring in, from abroad, fully made steel plate cheaper than we can buy, without transporting, slab from 300 miles down the road, no company could work with that. There are the energy costs. We went through a spike a few years ago. They have not really gone down; they went down a bit. It is shocking that our energy costs are so much more, even just going across to France or Germany. We are two-thirds more than they are to even start. The playing field is so unlevel. It is not good.

When was it mothballed?

The last plate we did was in summer last year. “Mothballed” makes it sound as if it has just been lying derelict. It is not. On-plant workforce have the option if they want—and it is if they want—to be at home on 85% of their wages. They have the option of coming in, and there is maintenance. We have engineering teams who turn the mill and make sure we are ready to go. We have sales teams, supply chains and technical within on a daily basis, because we are still actively looking at orders and replying about orders. While the market was unfavourable the company made the commercial decision not to take anything on.

Which company is that?

That would be Liberty Steel.

Who owns Liberty Steel?

Sanjeev Gupta.

Where does Greensill Capital come into it?

It does not for Dalzell. Greensill was primarily around Speciality Steel.

It is just GFG that is the owner.

That is the blanket organisation for Sanjeev’s parent company.

Do you think that it has contributed towards the collapse of steel manufacturing, therefore, in Scotland?

The issues that the parent company is having have not been favourable. It has kept us going and made sure that everyone was paid on time and that the plant is still in a position to start up again. The issue is that we have not had the extra capital for investment that we could have had. For the past few years, we have been static.

Who should that capital come from?

That is what we were saying. It has to be a collective. Yes, the company has to be able to put something towards it, but, when it is for the good of the country, there should be more.

Has GFG not received substantial funding from Governments?

There was an initial set-up with Dalzell and I know that there has been within other plants. You have to understand that the layout of the GFG is that every plant is independent. I will say, as an employee of that, our plant are on their own. The fact that we are still here as a start-up is down to the management within Dalzell. I am very proud that, as Dalzell steelworkers, we have kept this going.

But you have had no orders in the past year.

The decision was made not to actively go after orders.

Whose decision is that?

That comes from higher up than us.

Was it GFG?

Yes.

So GFG has taken the decision not to seek orders.

It is uneconomical for GFG to seek orders at the present time. That was why we stopped and now why we are ready to come back on board, because we are in a position to do so. The market has changed. Slab prices have come down and GFG can see that there are possibilities for us getting back fully into the market again.

Jacqui, do you want to enlighten us on all that?

The international steel economics for all the steel companies is that the bigger and more supported by their own Governments they are, the more cheaply they can make steel. I worked in south Wales and could see different pricing for everything, from rates to process gases to hydrogen, on the amount applied to the Netherlands. To back up what Angela is saying, there is that discrepancy and a level playing field is not there.

How could we have avoided the situation where Scotland’s only steel plant then was mothballed and no longer seeking orders? You are suggesting that this was as a lack of Government intervention. We had two Governments over the last 14 years: a Scottish Government and a UK Government. The suggestion earlier in your evidence was that there was no industrial strategy and no defence strategy. Where does blame lie? Is it the two Governments or GFG? Where is it?

I do not think that pointing the finger is very helpful on this one.

We need to understand how we reached this situation.

Yes, exactly. We have not had a steel strategy. We have not had a Scottish steel committee or anything like that. There is not the joined-up thinking. Everybody on board has to take it. There has to be talking. We have to see where the supply chain should be. Where we sit just now, we have a steel company, fabrication yards and shipbuilding. That needs to be joined up.

There was not a steel strategy.

There was a joint taskforce that was set up.

By who?

It was a joint one. It was in 2015 to save Dalzell.

That was 10 years ago. Who was part of that?

That was joint. You had the unions, the company and, I believe, Members across all political divides.

Both Governments?

No, this was a Scottish taskforce, so it was Scottish Government and different parties, so they were all together.

The Scottish Government set up a taskforce 10 years ago.

Yes.

With the scale of intervention you are talking about, just to buy a new mill, for example, you are looking at somewhere between £300 million and £500 million. These are significant moneys. That is one reason why we have ended up with such a burning platform and such a problem.

The Scottish Government then decided to invest elsewhere in Scotland, did they not, in the steel industry, but not Dalzell?

Yes, but those levels are huge. Also, that intervention approach on steel has not existed in the UK since the 1980s, so we are talking a long time.

Do you think it was a strategic error for the Scottish Government’s funding to be elsewhere with GFG, rather than Dalzell, the largest steel plant in Scotland?

You need a more holistic approach across all of the UK. Steel is not something that you can do in one plant in a small place on its own and expect it to be able to compete with the likes of significant plants in India and the far east. You need a much more co-ordinated approach. I understand what you are saying about the Scottish Government; I would have expected a Scottish Government and a UK Government to perhaps pay more and put more time and effort into working with us. The counter of that is the Automotive Council in the UK. For the last 15 or 16 years it has sat down quarterly and there has been very strategic intervention in the automotive industry.

There was a taskforce, no steel strategy, no orders for the past year and Scotland’s largest steel plant mothballed. That is the situation we have reached.

Yes.

This is to both ladies. What would the impact on industry and workers be should the Dalzell mill close?

You would not have any Scottish steel going into any Scottish projects. At a time where there seem to be so many potential orders out there, from our frigates to the green energy transition, offshore wind farms that seem to be cropping up everywhere in bigger and bigger fields and all that, how can any Government look to the economy and not have the basics of the steel industry that props it up? It is the foundation of every good economy. Especially at a time of turmoil across the world, most countries will look after themselves. They are not going to be looking to export to a small country halfway across the world, so we need to be self-sufficient. We need to get back to something like what we were. We were world leaders in steel at one point. We went out there and showed everybody else how to do it, but, from successive UK Governments, we have had no investment for years. We have had no steel strategy and no Steel Council. We had a lack of interest for at least 10 to 15 years. It seems to be an afterthought, instead of being a foundation to your economy. Politically, it is very bad to let the steel industry go.

You just touched on countries looking after themselves. Can you tell me how much steel Scotland imports?

I am sorry; I would not have the exact number.

What about in percentage terms?

I would say it is two-thirds of the whole amount that we bring in. We supply very little in the grand scheme of things now, compared with even 10 to 15 years ago. It is considerable, but it is a cost issue. It is hard when other countries are mass producing at lower prices with energy that is sustainable. You cannot compete.

When you say that, I think of the Chinese steel that we imported to build a bridge. That bridge then had to be repaired a couple of years later. I will move on from that. Jacqui, do you have anything to add?

I wanted to go back to your original question when you were asking about how it impacts people. That is critical. I always read things such as the Productivity Institute’s reports through the eyes of an engineer, and I think Angela will as well. We talk about productivity and I do not think that people really get it. Let’s bring it back to people and the workers. Manufacturing has a huge impact on the economy because you employ people. It is not just IP and licensing; if you put that footprint down, it brings in additional economic benefits. Manufacturing gives you a solid base. We see countries that have strong manufacturing, such as the US, China or Germany, much more able to weather economic storms. We know that it is a good thing, but, when you come back to the people, there is something about making—making steel, plate or strip, which is my background—and seeing it go. I worked on Llanwern when the heavy end there closed, with the loss of 1,500 jobs. You see the social impact and the impact on health and wellbeing. You see increased levels of everything from domestic violence and alcoholism through to suicide and others. The Teesside documentary post the Redcar closure is a classic. If you flip it around and say, “If we can increase our manufacturing, do the right thing and bring it forward, you have the opposite effect.” You get that pride back. You see much bigger impacts on health and wellbeing, as well as the economic stability. That is my point. I wanted to bring back that macro. We can talk in these highfalutin terms, but, if you can go to work, make steel, have a good eight-hour or 12-hour shift on plant and go home, pay your bills and pay your mortgage, it gives you such strength.

To that point, I would add that, when you lose manufacturing industry, regardless of what industry it is, you lose those skills, as we are currently seeing throughout the UK, particularly in Scotland. We have lost skills. This is what is hampering companies in bidding for contracts, because they know we do not have the skills base, so I would agree with that point. Ms Carrigan, it has been reported in the Scottish Daily Express that the mill may resume production this month. Can you shed some light? Can you confirm it?

We have secured orders for the fleet supply ships. As previously said, that would be steel from Scunthorpe and Dalzell, and then fabricated at Harland & Wolff in Appledore. Steel has been ordered. We are in the process of coming back to work. It is getting everybody back on site. That steel will be cast at Scunthorpe and on its way to Dalzell. There are delivery dates for the end of this year and into next year, just for the amount of time that it takes to fulfil the order.

Is this order that you have for steel what you describe as a baseload, but you need more?

It will get us started again and is a good thing to get us up and running, but it is not sustainable, because these kinds of projects want a bit here and a bit there. You want to be rolling all the time. You do not want to be on and off. It is not good for the mill to bring furnaces up to 1,200 degrees, put them off again and then start them up. We all know that with our oven and our air fryer, and it is the same on a large scale. We need to get more. The orders should be there, if you look across UK procurement, or if we could bring the energy costs down and get our steel stockholders back in. It is definitely a baseload, but not sustainable for us.

Can I ask a supplementary on that? Sorry, I had not picked you up fully there. It is great news that you are about to resume production. What was the reason for that?

That we have the fleet supply ships.

Yes, exactly. Is that from BAE? I know you were saying that you have had orders from it since 2017 in your earlier evidence.

These ones are slightly different. Those are ongoing projects, but this one is the fleet supply boats. There was a lot of controversy at the time about these boats, because they were not classed as needing UK content. The fact that we do and we are actively putting UK content into these is really good. The fact that we are using steel from Scunthorpe, which, as we said, we were so close to losing, and the supply chain of slab, plate and fabricated bases within the UK is really good news. It is the way it should be.

I know that this is perhaps difficult for you to answer. How long do you think you can keep that going for before you have to look for other orders coming in? That is maybe unfair.

It is not good for a mill to be relying on one product. You need a good mix. Ideally, once that starts, cashflow and things change. We will have money. The base price of slab has gone down. We are talking with British Steel, now that it is back as a UK company. There are definitely winds of change and we should be taking advantage and getting back up to speed. That is what our owners should be doing, and our sales team are out there actively looking for orders as we speak, because it has to sustain the mill now. This is the chance we have got, and we are back on.

Do you think that the Government saving Scunthorpe demonstrates the strategic importance for not just Scunthorpe but the whole of the UK?

It is the whole of the UK. You have to remember that 10 years ago we were one company. We were one supply chain. You had your big blast furnaces that were supplying into all manner of rolling mills. We had beam mills, rod mills, strip and plate. These were fundamental to keep us all going and that was allowed to be mothballed and broken up. That meant that, as smaller companies, we were competing. Everybody was trying to make a profit out of their area, rather than having a combined finished product, bringing in the pipe mills as well, with all the hydrogen pipes and everything they have going on. The business is there, but we are all fragmented. We need a joined-up steel strategy, which we are still waiting on and were promised in the spring.

I am not quite sure I understood the question. I am much closer to the Port Talbot project than Dalzell, so the two of us are a good combo.

No. The blast furnaces in Port Talbot have been switched off. They were switched off on 29 September last year, but construction of the new electric arc furnace is under way. Port Talbot was making 3.2 million tonnes, roughly, of hot metal and slab—

It was making it from iron ore, coke and sinter, through the blast route. I heard from Rajesh Nair, the managing director in Port Talbot, last week at the transition board, that it is on plan for the transition by 2027. It is in fact two weeks ahead in what it is doing. There seems to be some confusion around Port Talbot. Port Talbot has reconfigured to a much lower-intensity layout, with electric arc furnaces, and a lot of the American mini-mills are the same. It is going to make 3.2 million tonnes of electric arc steel through the world’s biggest electric arc, which has some really quite novel technology in it, called semi-continuous feed, which allows it to be more efficient and produce at that scale. It is a really exciting and huge project. I am meeting with Tarmac on Friday, which is doing some of the land works, and you are talking millions and millions of tonnes being moved for foundation. It is a really exciting project, but, in doing that, it does not need 2,000—I think it is now 1,800—staff, and that is where the layoffs in Port Talbot have been. They are not closing the concast. They will be producing slab, but it is very important to understand the nuance. Angela and I have never met, because strip steel, strip slab and strip chemistries are very different. Our products all go into automotive vehicles, white goods, chairs, office furniture and filing cabinets. It is very different ultra-low and low-carbon steel. Scunthorpe’s configuration and the Liberty configuration are much higher alloyed and they have different configurations on the secondary steel mill to facilitate that. They are not as interchangeable as people like to think, but it is an exciting project down there. As I understand, you can see that the planning has been in train for a long time. That planning permission has gone through very smoothly and construction is underway.

Port Talbot cannot make slab for Dalzell. It just cannot. At the moment, it is importing slab to keep its own mills running.

At present, we have said that it is only the blast that can produce plate. That is just down to size, because plate is very big, so you need large scale. In plants such as Speciality Steel, which already have electric arc furnaces and were part of the Liberty group until a few weeks ago, under the Liberty green steel banner, there were plans in place to put in plate casters, so that they could potentially, moving forward, supply the plate in a green fashion. There are plans in place. At the moment, if you turn a blast off, you lose your plate, but we need to transition and get the casters in place.

It is because we are the steelmen, from our football club to all the working men’s clubs—I know that that is men again and we are two females here. It is what that town was built on. It is what people know and where the skills are. You cannot just walk into a jobcentre, put an advert online, walk into a steelworks and be able to do that. These are highly skilled jobs, finely tuned to what that mill needs. It is a sense of pride and most people within the community appreciate that.

Can I jump in for one moment? I think that people miss this: in the 1980s, steel plants around the UK transformed through digitisation and automation. When I started in 1991, there were already neural networks, which, in effect, is machine learning and AI, in steel mills. People do not understand the complexity and challenge of doing what we do in steelworks. We love it.

With offshore wind, you are finding that it is the size of the components that they are looking at. It goes down to the fact that the foundations of our plant are 150 years old. There are beams in certain places in the plant. Our plate goes up to 1,200 degrees, so you cannot lift it with magnets. You have to be able to manoeuvre it between beams. It is simple things like the fact that the offshore wind market is looking for 24-metre-long plates, but our beams only allow us to get 20 metres through. There is always a potential to invest, modernise and move forward, but those are the foundations that we have. We are ruled out because of a length of plate, which should not be right, because you can roll the product. It is just manoeuvring it around the plant.

Yes.

The Government’s steel strategy is going to be announced shortly. We wonder how that is likely to impact Scotland. Do you have specific priorities that you have put forward in order to help the Scottish steel industry?

The Steel Council has been re-set up. The Steel Council has been in place, but had been overlooked for quite a few years. The incoming Government decided to put back in place the Steel Council, which is made up of leaders within all the steel companies, our union community, plus other unions such as GMB. There are local politicians from Scotland who sit on this council as well. Before this strategy is going out, we believe that it is going to be run by those people on the Steel Council, the people in the know and the people who are on the ground, so they should be tailoring that new policy to the needs of the steel industry.

I work for Professor Dave Greenwood. He was the technical chair of the Automotive Council group, the one that came up with gigafactories, the Faraday battery challenge and lots of interesting things around motors and electrical steels. He is the CEO of Warwick Manufacturing Group, which has one of the biggest steel research groups in the UK. He sits on that group, so I asked him about the Steel Council, whether it is meeting regularly and whether it is going to be effective. He worked for 15 or 16 years on the Automotive Council, which has had impact and changed the way the UK automotive industry looks, so I was interested to take his approach. His answer is that, yes, it is driving collaboration. It is that inter-company bit that is really critical for a country the size of the UK. We are not China or the US. If you can get the companies to share and work together, rather than compete and stay in silos, there is an opportunity for the Government to look at those collective, UK-based interventions, where the strategic decision making within companies and Government ends up being more than the sum of its parts for the country. That is the bit that I thought was really interesting. We have touched very much on all the production of steel; I want to make it really clear that Scotland is critical. A lot of your industries rely on a lot of steel, not just plate. Your construction, aerospace, oil and gas, and general manufacturing are really critical. If we can not only have UK producers, but upskill, digitise and help automate the ones that consume steel, you can increase your market demand. This is the complexity of what we are dealing with. We have to think about that whole ecosystem. There are not easy answers. We quite like to say, “We will just make everybody buy British steel”. I am working partly on floating offshore wind in the Celtic sea at the moment, and that is very difficult, because you can get into regulatory issues with anti-competition. We are a small country. It needs to be a real thought-through thing, where you are looking at lots of small changes that increase the probability of success throughout the industry. It is not just knee-jerk reactions. That is why you need these companies, their strategists, the Government and the civil servants working together.

Am I naive in saying or thinking that, if we are going to have an industrial strategy and a steel strategy, and there is going to be a lot of central Government money going into that, presumably we should tie the purchases of British Government steel demand to being made in Britain? That would make sense to me. If we are going to commission these ships, we should require them to be made out of British steel. Otherwise, we should not be putting £2.5 billion of our money into it. Is that too simplistic?

In an ideal world, we would.

You are looking for regulatory and procurement decisions that support what you have and those assets you have in the UK, so that they get more orders and can supply more orders, alongside those strategic aspects, whether it is research, energy prices or anything else. It is a tad naive, because of the breadth of things that steel can go into—I am a steel metallurgist, so you do not want to get me on that subject. It is what Speciality does in Sheffield, what Forgemasters does in Sheffield and what 7 Steel, which is 1.2 million tonnes a year, does in Cardiff. It makes rebar, channels and everything. Steel is an immensely interesting, but also immensely nuanced thing. There will be some products that we make in the UK that will not be made elsewhere, or they will be made in very small amounts elsewhere. You have to design your assets to make some of these real speciality things. A carte blanche “We just buy British” will increase prices and drive you to a point where perhaps you will not be able to produce the end product, so you have to be really clever with this.

Community and WMG are both members of the UK Steel Council. I have a question in two parts, if I may. To what extent has the Scottish steel industry been considered in the council’s discussions and decision-making process? Secondly, can you please give us an overall assessment of the council’s effectiveness and impact? Who wants to start with that?

As I said, the Steel Council has just recently reconvened. I do not go to these meetings, but I believe, from our general secretary, that Dalzell is talked about quite a lot of the time because it is so strategic; it is the last plate mill that has approval to go into steel plate for ships—not just defence, but any grade of ship. We have the approvals in place. When you have so many defence contracts for ships, you really should be looking after that. I believe that it has been talked about a lot. As Jacqui said before, all the companies getting together, and all the people with this knowledge being in that one room, is fundamental for the way forward.

Plate is just so important. It is important to shipbuilding, potentially armour plate and construction. Plate will be discussed at length but, when you look at what the Steel Council is going to be talking about, it will also be talking about defence. You have Babcock; you have BAE Systems; Scotland has a wealth of intellectual capital around that. You have the National Manufacturing Institute Scotland and the advanced forming and forging research that it does. The Steel Council is meeting regularly. I understand that it is looking at this from the Welsh, Scottish, Northern Irish and English perspectives. We have just been talking about how the global stage is full of Goliaths that have a lot of funding. We need to use everything we have to secure that future success.

Ms Carrigan, how effective are current UK trade safeguards in protecting Scottish steel from import surges that may occur?

The fact that we have not been able to supply plate at a competitive rate for the past year says it all. I believe there is definitely more focus on it. From a plate point of view—I know there are other parts of it—if they can bring in 4,000 tonnes, which is almost the full UK market, this is not quite working the way that it should be. We need to have a review of the levels and make sure we are actually safeguarding and it is not just nice fluffy words.

I understand that those safeguarding measures are due to expire in 2026.

Yes.

Are there steps that need to be taken to ensure that Scottish steel remains protected or is better protected?

Yes, definitely. We have seen our European neighbours putting theirs back in place. We have CBAM and all of that happening. We need to move quickly, because we will be exposed. There will be a glut of steel within the market. There will be boats coming in from everywhere. We need to shore up our defences and make sure we are not just going to get dumped with cheap imports that cannot go anywhere else. You have seen that with the American tariffs. That sent everybody running and we had boats with cargos of steel all coming this way. We need to take decisive action. It is not just about saying it; I know there are companies that will challenge on this and say, “This is coming in from here.” The time constraints are really bad as well. It does not happen immediately. We need to tighten up and make sure we are doing what we say we are doing.

What is your assessment of current public procurement rules? To what extent do they support or hinder public bodies in purchasing domestically produced steel?

The purchasing is very high level. Nobody comes to the companies down the chain to find out whether they can make things. The discussions are just with the primary investor. Your offshore wind farms will have one manufacturer, which will then have all the different suppliers. It is only at that level. For someone further down the supply chain such as us, you need to be looking the whole way. You need to be responsible the whole way. You cannot just say, “We will use a certain amount of UK content”. It has to be spread across all the UK companies.

It is very difficult when you are looking at large construction projects or large offshore wind projects, because you are asking companies to tender. They may well already be in a 15 or 20-year contract with some of their suppliers and, because they are such long-term contracts, they have driven down prices. When you then say, “We want British steel” or specific types of steel, you can get some legal challenges back to that. It is a difficult space, but it is absolutely one that we should pursue and assess. I am interested to see what the steel strategy says on that.

As of February, central Government Departments are required to report the origin of the steel used in public projects. To what extent has this reporting plan helped to support or protect UK steel industry to date? Has it helped?

I cannot comment on that.

We have not seen any figures come out as of yet, I’m sorry.

What further steps, if any, are needed to ensure a level playing field for UK steel producers competing with overseas suppliers for public contracts?

We need action on energy and procurement and we need to stop the dumping.

We need to stop cheap imports—I will say it.

One of the things that we are seeing—we are all aware of it—is the tariffs. There have been lots of changes. Anything that realigns global trade flows at the last minute is a real problem because it will always have knock-on effects. Companies will have steel that they want to offload elsewhere. The tariffs are almost driving some of this behaviour. This is why you are seeing the regionalisation. For steel of whatever source, whether it is electric arc or from a blast furnace and basic oxygen steelmaking, the lead time to be in a finished product can easily be eight weeks, if not longer. You always end up with stock, and it is very expensive to hold that stock. That is where you drive that type of negative behaviour. I do not want you to feel that we are looking for protection. This is quite a special moment internationally.

For turbines, it is China, South Korea and India. It is coming from far away. We do not have an actual dedicated fabricator within the UK to make the turbines. They are getting shipped in.

Yes, it is final product. There are companies that would like to invest and move in, and we should embrace that. There is no way that we are going to get plate into these products when they are made halfway across the world. That just does not make sense. The Chinese and the other leading manufacturers will use their own plate.

It is not my area, but I have been involved in some meetings where that has been discussed. This has been discussed for quite a few years. We are going back at least four or five years. There has been a thought about using electric arc furnaces to bring that down. While you have such high energy costs—electric arc furnaces are primarily electric-based—is that financially viable? I would not know that, but it has definitely been talked about for quite a few years.

Scrap steel is traded. It is a commodity. It has a high value. With the projected increase in electric arc furnaces globally—the end goal by 2050 will not all be electric arc; there will be a mix—there is a real focus on good-quality scrap steel. There is an opportunity. We import something like 19 million tonnes of steel in components, products, raw materials and everything every year as a country. There are 19 million tonnes. Those companies are used to segregating it, moving it around and shipping it. They are global companies that make money. Turkey is one of the biggest purchasers because it has electric arc furnaces. You are going to see an interesting dynamic exist in scrap steel where Scottish companies—it may not be Dalzell and it may not be a producer in Scotland—are going to benefit from scrap prices increasing.

Yes. In a blast furnace, you are blowing a reductant onto Fe2O3 or other ores. That is your blast furnace route and it gives you pig iron. You then need to put it through a steelmaking process, and then from the casters down it is identical. An electric arc furnace uses a different source of iron units, which can be scrap, something called direct reduced iron or other inputs, which you melt using electricity. It is a different thing. There are pros and cons to both. That configuration tends to be less staff-intensive, so you have fewer wages to pay and can be more efficient, but it can increase the residual elements in the steel. One of the drivers now will be how we sort and segregate out scrap. The scrap companies dealing with that are going to be very focused on the research and development for electrical.

I am not quite sure I understand. You have companies in Scotland now that will be internationally competitive on scrap steel. I am not sure whether they are Scottish companies or UK companies, but I would assume that in your waste industry you definitely have companies making use of decommissioning steel. Electric arc furnaces will want to increase the quality, segregation and cleanliness of all scrap in the UK. You are expecting that some of that will be shipped abroad, but for profit to those companies. I am expecting companies such as Tata, which is switching in 2027, to be negotiating contracts now for scrap steel. It is logical.

At the moment, that is what you are seeing. A lot of the electric arcs that we have are looking for help. The difference with electric arc is that it can be switched on and off as well, depending on the level that the energy is at. In a very simplified way, electric arc is recycling. As Jacqui said, you need to clean that up, especially for plate. Again, this goes back to the fact that plate is very regulated. The chemistry is very specific. You cannot just put anything in and come out with plate at the end that will meet the requirements. There is a lot of fine-tuning that needs to go on. That is why we talk about casters that will put it to plate. While energy costs are so high, it is not economically sound to use them compared with blast furnaces. It all comes down to how green the product will be; it is green with electricity, and less so with blast. The best model to keep them going at the moment is probably a hybrid one. They have specific fields that they go into where they work better. It cannot just be a line in the sand between blast and electric. The fact that we lost Port Talbot is absolutely shocking.

Kishorn Port in Wester Ross is an enormous dry dock. Last year, it decommissioned or broke down a rig called Northern Producer. It currently does not have any more rigs coming to it, and, indeed, I understand that nobody in Britain does either. If you were to speak to the management of that port, they would explain that the rig owners do a tender, which is bid for by a middleman who sends it to places such as Turkey—they would specifically say Turkey. The reason that they do that is that the countries that are winning those tenders do not have the environmental requirements we have in the UK. We are effectively demanding that our oil producers be environmentally friendly; we demand that they decommission their rigs, but we do not put in place the environmental standards on the ultimate buyer to allow the business to remain in Britain. If we are losing our steel offshore, that is going to be a major part, because the decommissioning programme is only beginning to roll out now.

Yes, those middlemen will be contractually obliged on supply chains. There are complex company dynamics in all of it. I would agree with that: in terms of pollution and even health and safety, you would probably be concerned about certain countries and how they go about this. There are things that we can do. I am sure the Steel Council and others are really considering how we can realign and encourage more scrap to stay in the UK. Decommissioning rigs is absolutely part of that picture, but it is wider than that. Some of the early offshore wind turbines are coming towards their end of life, and you can see that increasing over the next 10 years. There is a real driver to look at how you can take advantage of being an island with those opportunities for scrap. Blast furnaces and basic oxygen steelmaking also use scrap steel. It is an exothermic reaction. We were buying scrap and using it to cool, particularly in south Wales; it is ultra-low, which means it gets hotter, so you need to use a little more scrap. All pieces of steel have recyclate in them already. It is a different configuration. Tata has made a decision based on a business plan, and I have no doubt that the business plan is to be profitable for the long term.

That single oil rig was 12,500 tonnes. It is steel. It just shows what we are potentially exporting because we are not going through the correct process.

We know that many oil and gas operators already have long-term decommissioning contracts with overseas firms. Do you have a sense of the proportion of the North sea that is affected by those arrangements?

No, I don’t.

I can understand you might not. Are there interventions that could be made to redirect existing decommissioning contracts and enable domestic recycling of steel?

Earlier, I said that you need to take an ecosystem approach. You really do need to look at demand for products. Scrap is critical to all steel types, and always has been. For me, it is about looking at how the UK supports that entire ecosystem from the moment that you are scrapping all the way through. I am sure that there are regulatory approaches that can be taken, but you are also seeing a transformation. In the next two years, there will be a huge uptick in demand for scrap steel from the UK. There will be some really interesting ways forward in that space.

I am WMG, so I feel like I should probably be the one to answer, although I was not the author. What I would say is that the world has changed in the last few years, even since that report was published. While an electric arc furnace in Scotland is a possibility, it is about the complexity of everything that you need to do that. You need to have a skilled workforce—I would not want to be rolling plate, because it is not my speciality. It is understanding that you need leadership that can take a business case like that through. To be fair to Tata, it is a huge business case to transform that site, which has gone through Tata Steel as well as the UK Government. The economics to it are perhaps the more minor element. How do you get the capital funding? How do you get the workforce? How do you fit it into the existing UK and European mix for steel? Who are your customers going to be? What are you going to make? What are the nuances? What is your USP going to be? Every electric arc has a different USP. That is why 7 Steel is making rebar down in Cardiff, along with channels and other things, while Speciality Steel is making something very different. You mentioned offshore and decommissioning. You have to be a little bit cautious about the scale. You said that the rig was 12,000 tonnes. They need 3.2 million tonnes a year for the electric arc in Port Talbot. You are going to need a lot of rigs to supply it. The complexities are really nuanced. That does not mean companies out there globally are not looking. That is the other part of this puzzle, foreign direct investment and thinking around this strategically.

For me, it would be about the data, the numbers, the “Why Scotland?” and the access. You were talking about contracts being tied up in the North sea for a long time. Is that something that they can change? That is the thinking. It is the pitch for why Scotland could be a place to put some steel assets. What land would you put it on? Where would you put it? Gigafactories are a classic example of really having to pull together across pretty much every single Department in Government as well as industry to be able to make that business case come to reality.

This is a slight curveball—Ms Murray, it might be best for you rather than Ms Carrigan. One of the biggest private sector employers in the West Highlands is ALVANCE, which manufactures aluminium and has the same owner as Liberty and all that. It would be a major blow to our community if that aluminium plant, which is the last in the UK, were to close. I am convinced that we could make a strong case for it to have the same level of national importance as steel. Do you know whether that has been considered?

I do not know whether it has been considered across Government. I have been to Lochaber smelter. It is an amazing facility; it suffers, like all of the steel industry in the UK, because the economy of scale pushes your price down. In global terms it is a small smelter, but strategically that one is very special. Aluminium is immensely tightly bonded to oxygen. To pull it away from oxygen takes about seven times more energy than steel—that should give you an idea. It is 100% renewable. The hydroelectric scheme that powers that smelter is an immense feat of Scottish engineering.

We are proud to say that Fort William is the wettest town in Europe.

I can believe that.

It also makes very high-quality lithographic aluminium. Things such as aluminium foils for batteries need lithographic aluminium. I would hope that one has some very intelligent strategic thinking going on alongside it both in the Scottish Government, who have supported it, and in the UK Government. Colleagues of mine within the research technology organisations are working with Government on a metals strategy for the UK. I have not been party to that, because I have been a bit busy, but I am sure we can open up and discuss that. It does also get picked up in the supply chain for batteries because of the importance of the quality of the metal.

Now for the real question: is there really an opportunity to revitalise the industry? Can we become viable on the global stage?

Personally, I have been in the industry for 20 years and we have weathered every storm going, it seems. This past year has probably felt like the lowest ebb, with all the potential that is out there. It is an oxymoron: you are down here, but the opportunities are there. As a workforce, we sit waiting, ready to go. We want to get involved in everything that is happening. Moving forward, it is the best time for the steel industry, especially the Scottish steel industry and especially Dalzell. We just need help to get there.

It is a critical enabler for the UK’s economic development, its defence and its net zero transition. We have not talked about grid steels or electrical steels, which we have also lost. For me, there is a macro need to recognise and understand just how important steel is, particularly in difficult times. Whether it is wars or trade wars, we need to be able to hold our own. That driver has changed Government behaviour; I have never seen this level of investment in the steel industry—I am sad to say I am 30 years in it; I don’t know about you, Angela. For me, it is exciting. This is a moment that could make or break the industry and manufacturing in the UK.

That concludes our formal questioning this morning. Thank you both very much. It has been very interesting. We have all learned about something that we probably thought we would never have a need to know about. It has been very useful in terms of our report and as a standalone element as well. Thank you both very much for your time and your input. I will now declare this meeting closed.