Steel rescue package could be a ‘missed opportunity’, Labour MP Stephen Kinnock warns
A government aid package aimed at securing the long-term future of steelmaking in South Wales could be a “missed opportunity”, a senior Labour MP has told Sky News.
Stephen Kinnock, whose Aberavon constituency includes Port Talbot, home of the steelworks owned by Tata, also said the deal could be counterproductive.
While it does include the building of electric arc furnaces (EAFs) – which are greener than traditional blast furnaces – it does not focus enough on transitioning to a decarbonised economy, Mr Kinnock said.
“Nobody’s really talking about hydrogen (to produce steel), carbon capture and storage,” he said.
Dr Jonathan Aylen, a steel industry expert at the University of Manchester, has similar concerns, describing the potential agreement as a “bit of a stop-gap solution”.
Getting rid of blast furnaces, which use coke derived from coal, would be an important step, however.
While they are a “great way to make steel” they are also a “great producer of carbon”, Dr Aylen told Sky News.
“For every tonne of steel you make you get two tonnes of carbon dioxide going into the atmosphere.”
But he, too, mentioned the use of hydrogen and carbon capture and said ministers need to take a “long, careful, hard look at what needs to be done to decarbonise steel and stop becoming, so to speak, being taken for a sucker by every company that wants a handout”.
For the unions, there are concerns about job cuts, because EAFs use less labour-intensive processes to produce steel than blast furnaces.
The government is “choosing to follow a jobs cuts agenda”, the Unite union has claimed.
Community, the steelworkers’ union, said unions had “not agreed any decarbonisation strategy for Port Talbot”.
A molten steel ladle
There are questions, too, about whether it is worth spending taxpayers’ money to support the steel industry.
Russ Mould, investment director at AJ Bell, said it accounts for a “fraction of a percent” of the UK economy.
UK steel has been through “multiple insolvencies” and this latest rescue plan could be seen as the government “throwing good money after bad”, Mr Mould added.
But Mr Kinnock said that failing properly to support the British steel industry could mean becoming reliant on metal from China which is produced in an “incredibly dirty, heavily polluting” manner.
The potential agreement, uncovered by Sky News, could see ministers handing over a £500m aid package, with Whitehall officials and Tata Steel getting close to agreeing a deal that would commit more than £1bn to the future of the firm’s South Wales plant.
Mr Kinnock said he had “real concern” that the “focus seems to be very much on electric arc furnaces”.
He added: “Nobody’s really talking about hydrogen, direct reduced iron, carbon capture and storage, which are all vitally important routes to decarbonising the steel-making processes.
“If we don’t have all those different routes we won’t be able to make all the grades and quantities of steel that we need to retain our customer base.
“And if we don’t do that there will be more job losses than are necessary, and it will be a missed opportunity by the government and by Tata Steel.”
Tata Steel, Port Talbot
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Mr Kinnock is calling for a “full spectrum approach” as the UK pursues rapid decarbonisation, and said it is “vital” the unions and the workforce are fully consulted about the agreement.
Asked if the steel industry has a future, Mr Kinnock said: “Imagine the cost of doing nothing. There are 4,000 very well paid, high-skilled jobs in the Port Talbot steelworks.
“If we’re going to transition to a decarbonised economy are we going to do that by importing steel from China?
“We’re also living in a dangerous and turbulent world. Do we really think it’s a good idea to be relying on other governments – sometimes hostile to the UK – to supply our steel?”
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Sharon Graham, the general secretary of Unite, said: “This government could make us the green steel capital of Europe – instead they are choosing to follow a jobs cuts agenda. Unite will leave no stone unturned in the fight for jobs.”
Community, the steelworkers’ union, said: “We remain in discussions with the company and the unions have not agreed any decarbonisation strategy for Port Talbot.
“We continue to support a solution that will maintain blast furnace production and safeguard the future for all the UK plants.
“We are ready to use all means at our disposal to protect jobs and our vital strategic industry.”
Fears of a US-EU trade war have been reignited after Europe refused to back down in the face of fresh threats from Donald Trump.
The word tariff has dominated much of the US president’s second term, and he has repeatedly and freely threatened countries with them.
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This included the so-called “liberation day” last month, where he unleashed tariffs on many of his trade partners.
On Friday, after a period of relative calm which has included striking a deal with the UK, he threatened to impose a 50% tariff on the EU after claiming trade talks with Brussels were “going nowhere”.
The US president has repeatedly taken issue with the EU, going as far as to claim it was created to rip the US off.
However, in the face of the latest hostile rhetoric from Mr Trump’s social media account, the European Commission – which oversees trade for the 27-country bloc – has refused to back down.
EU trade chief Maros Sefcovic said: “EU-US trade is unmatched and must be guided by mutual respect, not threats.
“We stand ready to defend our interests.”
Donald Trump speaks to reporters in the Oval Office on Friday
Fellow EU leaders and ministers have also held the line after Mr Trump’s comments.
Polish deputy economy minister Michal Baranowski said the tariffs appeared to be a negotiating ploy, with Dutch deputy prime minister Dick Schoof said tariffs “can go up and down”.
French trade minister Laurent Saint-Martin said the latest threats did nothing to help trade talks.
He stressed “de-escalation” was one of the EU’s main aims but warned: “We are ready to respond.”
Mr Sefcovic spoke with US trade representative Jamieson Greer and commerce secretary Howard Lutnick after Mr Trump’s comments.
Mr Trump has previously backed down on a tit-for-tat trade war with China, which saw tariffs soar above 100%.
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Talks between the US and EU have stumbled.
In the past week, Washington sent a list of demands to Brussels – including adopting US food safety standards and removing national digital services taxes, people familiar with the talks told Reuters news agency.
In response, the EU reportedly offered a mutually beneficial deal that could include the bloc potentially buying more liquefied natural gas and soybeans from the US, as well as cooperation on issues such as steel overcapacity, which both sides blame on China.
Stocks tumble as Trump grumbles
Major stock indices tumbled after Mr Trump’s comments, which came as he also threatened to slap US tech giant Apple with a 25% tariff.
The president is adamant that he wants the company’s iPhones to be built in America.
The vast majority of its phones are made in China, and the company has also shifted some production to India.
Shares of Apple ended 3% lower and the dollar sank 1% versus the Japanese yen and the euro rose 0.8% against the dollar.
Donald Trump has threatened to impose a 50% tariff on the EU, starting from next month, after saying that trade talks with Brussels were “going nowhere”.
Mr Trump made the comments on his Truth Social platform.
It marks a fresh escalation in his trade row with the European Union, which he has previously accused of being created to rip off the US.
While the US has done deals with the UK and China to reduce their peak exposure to his trade war, the president’s EU threat, which would cover all EU imports to the US, would risk retaliatory measures from Brussels if carried through.
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Mr Trump said of talks between his administration and the EU: “Our discussions with them are going nowhere! “Therefore, I am recommending a straight 50% tariff on the European Union, starting on June 1, 2025. There is no tariff if the product is built or manufactured in the United States.”
The European Commission was yet to respond to the remarks. Officials signalled there would be no comment until after a call between top US-EU trade figures due later on Friday.
Financial markets, however, were quick to take a view. European stock markets were sharply down across the board.
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Explained: The US-UK trade deal
The FTSE 100 in London was more than 1.2% lower shortly after the Truth Social post appeared, while Germany’s DAX and the French CAC 40 were in the red to the tune of more than 2%.
US stock markets fell at the open on Wall Street. The tech-focused Nasdaq was down more than 1%.
The potential for damage to the global economy saw Brent crude oil sink by more than 1% to $63 a barrel.
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‘US is losing’ trade war
The dollar took a hit too, as the news only intensified existing market worries this week about the sustainability of US government debt levels.
The pound was trading at levels last seen in February 2022.
Mr Trump said earlier that Apple will be forced to pay 25% tariffs on its iPhones unless it moves all its manufacturing to the US.
Apple shares dropped more than 2% in premarket trading after the warning, also posted on Truth Social.
“I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or any place else,” wrote the president.
“If that is not the case, a tariff of at least 25% must be paid by Apple to the US.”
Production of Apple’s flagship phone happens primarily in China and India, which has been an issue brought up repeatedly by Mr Trump.
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On Thursday, the Financial Times reported Apple was planning to expand its India supply chain through a key contractor.
Taiwanese company Foxconn is planning to build a new factory in the Indian state of Tamil Nadu, according to the paper, to help supply Apple.
Sky News has contacted Apple for comment.
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