Celsa Steel (UK) Ltd - Resumption of Steel Production at Cardiff

I am making this statement today following the announcement on 4 June by Celsa Group that it plans to resume steel making at Cardiff.

This is very good news for the Splott and Tremorfa communities of Cardiff, who have suffered since the furnaces at the former ASW plant ceased. It is also a substantial sign of confidence in the Welsh industrial sector, which proves that Welsh manufacturing is seen to be competitive, vibrant and strong. It is good news for the UK construction industry, which faced having to import much of their steel requirements following the ASW closure last year. And it brings good news to those who yearn to return to work in the steel sector.  

It is worth noting that it is the first time that Celsa has embarked on a venture outside Spain, and intends to primarily target the UK domestic construction markets because it has confidence that this market will grow above the rate of other European countries.

In my earlier statements, following the ASW closure in the summer of 2002, I set out the actions the Assembly Government had taken following the ASW Chairman’s statement on 6 June 2002, until the appointment of receivers on 10 July.

In November, ASW’s receivers, KPMG, announced Celsa Group was the prospective purchaser of ASW’s assets and had entered exclusive negotiations. On 8 January KPMG announced that Celsa had completed the purchase of the majority of ASW’s assets in Cardiff and some of its assets in Sheerness.

I welcomed these announcements and the Welsh Assembly Government took a strong interest in these developments. I made it clear no state aid support, which would breach EU Rules, had been offered or given.

I also said that Celsa, over the coming months, would study a Business Plan to determine if the company would commit to Cardiff, or possibly move the plant elsewhere.

Both I and the First Minister were optimistic that, market conditions withstanding, we would see the return of steel making to Cardiff. I emphasised that Cardiff could offer Celsa a high-quality, second to none, local skill base,  ready and waiting to be utilised. I firmly believe that this, together with the expressed willingness of the Welsh Assembly Government, Local Government and Agencies to work with the Company to bring life back to the furnaces, strongly added to the argument in favour of committing to Cardiff.

In May Celsa announced it would be spending a significant sum to bring the plant back into operational status - the closure of ASW last year coincided with its annual refit and work also had to be done for environmental improvements.
 
Celsa has now announced that it intends restarting steel production at Cardiff and recruitment is underway.  I hope and trust that many former ASW and Corus workers - and also former contractors - will be re-employed at Celsa, who will gain from their knowledge and experience of the works.

I understand Celsa could restart steelmaking and rolling next month. The company, to be called Celsa Steel (UK) Ltd and headed by Senor Francisco Mesegue, aims to restart one of the two Tremorfa Electric Arc Furnaces and reach a production rate of 900,000 tonnes a year of liquid steel by early 2004. I am informed that the Cardiff mills, with a maximum capacity of just over 1 million tonnes, will initially operate below capacity.

Celsa seems to be indicating that there are two phases of development for the existing ‘A’ furnace – the first phase involving work necessary to bring the furnace back into operational status with hot trials planned for July. The second phase will increase the size of the furnace by enlarging its shell – effectively increasing the billet output of the furnace from 600,000 tonnes per year to 850,000 tonnes per year at full capacity.  

Billet should therefore be produced at Cardiff by the end of July and I understand that Celsa will then simultaneously recommission the Tremorfa Section Mill and the Rod and Bar Mills at the Castle Works site.

Looking ahead, Celsa has indicated  it may invest in a new 1 million tonne a year meltshop. Construction could start in 2004, and be on stream by 2006.

These proposals demonstrate that Celsa is committing itself to a long-term presence at Cardiff. It is welcome and encouraging that the company has chosen Wales, and Cardiff, as its first investment outside its Spanish base and we welcome their decision.

Around 400 jobs will be created directly at the works, with another 200 contract-based workers. Local businesses will also welcome increased revenue from the returning workforce, something sadly missed from the streets of Splott and Tremorfa in recent months.

We will not forget those who continue to suffer with concerns about their Pension Schemes. Pensions are not a devolved matter; however, we will continue to lobby the Pensions Minister at Westminster to ensure the plight of those affected by the ASW Pensions Scheme is heard.

Equally it is not feasible to expect that Celsa will re-employ all those who worked at ASW - Indeed, it is pleasing to report that many former ASW employees have found new jobs and careers. The First Minister has, however, written to the Chairman of Celsa Group,  to emphasise the value of employing those former ASW and Corus workers who wish to return to steel making. The First Minister and I hope to meet Celsa’s senior management team when they are in the UK and I am sure that many Welsh steel workers will ensure a warm welcome is received.  

With Celsa’s Cardiff restart, and news that Corus has recently reopened a new tinning line at its Trostre Works, together with Corus’ recent announcement of investment at Port Talbot, I feel hopeful that the Welsh steel industry can look more optimistically to the future, and continue to provide a valuable contribution to the Welsh economy.