Steelmaking in Wales: Coked up MUCH modern manufacturing takes place on spotless shop floors with only the lightest sprinkling of staff to monitor the purring machinery. So Tata Steel's works at Port Talbot in south Wales come across as reassuringly gritty and old-school. The site is vast. A drive round its private roadways clocks up a dozen or so miles. A visitor passes hulking edifices, from coke ovens to huge steel-rolling mills, and finds a whiff of desolation, too. The makers of "Doctor Who," a science-fiction television series, have asked to use the moonscape created by mounds of coal and ore as a backdrop. At least one corner of the works is teeming as one of the site's two blast furnaces is replaced. The old furnace was snuffed out in July after 20 years" service. The new one will be built around a steel shell made of 14 tiers. Each has to be carefully lifted by a giant mobile crane, which itself had first to be assembled. A convoy of lorries was required to bring it to Wales. As the tiers pile higher, a small army of welders, pipe-fitters and electricians works at close quarters to reconnect the furnace to the works" infrastructure. A cadre of specialists from Portugal stands ready to line the furnace shell with heat-resistant bricks. In total, around 800 contractors are working on the new furnace at any time (the factory's regular workforce is 3,500). The bill comes to £185m ($296m). Tata reckons it is the biggest capital project in British industry this year. Admittedly, the competition is not strong. Investment across the economy has been sluggish. Firms have been reluctant to splash out on big capital projects. Demand is still weak, and many calculate that a cash buffer may prove vital if the euro-zone crisis worsens. And steel is even more depressed than most rich-world industries, thanks in part to a slump in construction. Output remains below pre-crisis levels even in the more resilient economies of America and Germany. Production in Britain this year is likely to be around a third below its 2007 level. If so, it would mark a new low point in what appears to be a long-term decline. The slide was only briefly reversed in the years before Tata bought Corus, the Anglo-Dutch firm that evolved from the privatised British Steel Corporation (see chart). So why invest in steel now? In part the decision reflects Tata's long-term thinking, says Jon Ferriman, the local boss. Britain has some lively manufacturing sectors, including carmaking, which need high-quality steel sourced locally. The right time to invest is when output is weak, he adds. Tata's other furnaces can take up the slack and keep Port Talbot's rolling mills supplied with slabs of steel. The new furnace will be more efficient than the one it replaces. Tata is making £53m of related investments this year to reduce energy costs by recycling the gasses that are a by-product of steelmaking. But sceptics wonder if the economic case for steelmaking in Britain still adds up. Wales supplied the world with iron in its 19th-century heyday, when the industry was built upon an abundant local supply of ores, coal, timber and limestone. These days the more refined sorts of metals demanded in carmaking or aerospace require the machinery and know-how that is still found mostly in rich countries. But the job of basic steelmaking is combining bulky ingredients, which are expensive to move, into a final product that has less weight. This gives a cost advantage to producers in emerging economies who have raw materials nearby. Steelmaking in China and other emerging countries has boomed even as it languishes in rich countries. Tata's European operation has been making losses. Profits are squeezed from both ends. Weak local demand bears down on the price of finished steel, while China's growing hunger for ores and energy keeps raw-material costs high. Relief may yet be found closer to home. Beneath the land around the Port Talbot factory lies an estimated 380m tonnes of coking coal. Tata is examining the business case for mining it. The project is five to eight years away, if it happens at all, says Mr Ferriman. If it were to go ahead, though, it would create work for 500 miners - as well as another grimy landscape for Britain's TV producers.