THE UK and Welsh Governments could be asked to contribute up to £30 million as part of an ambitious plan to save Newport's closure-threatened Orb Electrical Steels plant.

That is the size of the financial shortfall identified as part of a proposal being developed in an effort to safeguard Orb's future, which involves investment to enable the plant to make the specialist steel required for electric vehicle motors.

Details are being finalised by Syndex, consultants for the Community union, which represents most of the workers at Orb.

Commercial sensitivity means those details will not be published in full, but Community members at Orb have been presented with an outline of the proposal.

Syndex will conclude that with a new strategy and some public support there can be a sustainable future for the Orb plant, which would involve investment to enable it to produce the non-oriented steels required for electric vehicles, alongside the grain-oriented steels - primarily for transformers - that it currently makes.

This strategy would be based on a new Wales-only supply chain, using coils from the Port Talbot works.

The capital expenditure needed would involve the reinvestment of profits from the sale of CPI - a Canadian steelworks that was wholly owned by Orb, before being sold by Tata - and the money set aside to finance a closure.

Community says that a memorandum of understanding it agreed with Tata in 2018, in advance of a failed joint venture between Tata and German firm Thyssenkrupp, contained a commitment to reinvest the proceeds of the sale of any UK-owned assets back into the UK, and the union maintains that Tata should honour the spirit of that agreement.

In that event, according to the update provided to Community members at Orb, "this would leave a shortfall of just £30m, and we would look to central and devolved government to contribute to the new strategy.

"Given the role Orb can play as a strategic business of the future, enabling government to deliver on climate commitments and develop a new supply chain for electric vehicles, we believe there is a compelling case for government support."

The strategy advocated by Syndex will include three key aspects:

  • A new annealing line at Orb, to enable the business to produce the high-quality non-oriented steels required to build the motors of electric vehicles;
  • Investment in automation as part of measures to reduce the cost base and make Orb’s grain-oriented products more competitive;
  • Relocation of the hot rolled coil supply chain from Ijmuiden, in the Netherlands, to Port Talbot.

That relocation is deemed vital as in the long-term, Orb needs a new supply chain to continue producing grain-oriented steels. A switch from Ijmuiden to Port Talbot would take a number of years to allow for the necessary investments, and would help secure the supply chain in the future.

Community believes the proposal to be a "robust and credible" way to keep Orb open, and the union has asked for meetings with the UK and Welsh Governments to present the plan with its experts.

The union argues that Orb is the only plant in the UK capable to produce the necessary electrical steels for the electric vehicles market, with only a little investment.

In a briefing note issued ahead of a House of commons debate last week, it maintains that, given the above, Orb is "a strategically important business that can support the UK Government’s industrial strategy priorities around the electrification of mobility.

"Orb works can further the Clean Growth and Future Mobility themes of the industrial strategy, and through supporting a new UK EV (electric vehicle) supply chain contribute to greening our economy for the future.

"Failure to take advantage of opportunities to develop an EV supply chain for motors will be extremely damaging to our manufacturing footprint and balance of trade as inevitably demand for combustion engines will plummet as demand for EV motors increases.

"As the EV industry takes off, UK and European automotive demand for non-oriented steels is set to increase tenfold by 2030."