Ken Skates, Cabinet Secretary for Transport and North Wales
I am pleased to update Members on the progress of the Global Centre of Rail Excellence (GCRE), a strategic initiative established by the Welsh Government in 2021 to drive economic development in South West Wales. Located on the former Nant Helen open cast mine, GCRE is being developed as a unique, purpose-built facility for international-standard rail research, testing and innovation.
GCRE aims to harness the net zero transition for Wales’ economic advantage. By creating vital infrastructure needed by the global rail industry, the project will support the development of a high-quality rail technology cluster that can generate new green jobs, enable innovation-led growth and attract investment in key areas such as energy and research and development.
Sitting just fifteen miles from Port Talbot, GCRE offers a significant opportunity to bolster the Welsh Government’s efforts to help build a more sustainable and diverse economic base in South West Wales and I am pleased that it was showcased at the Welsh Government investment conference earlier this month.
The commercial momentum behind GCRE continues to grow, with more than 200 companies expressing interest in using the facility once it is built, with strategic partnerships having already been formed with Hitachi, CAF, Thales, Network Rail and Transport for Wales. GCRE’s development is guided by four missions aligned with Welsh Government priorities and the Wellbeing of Future Generations Act. They are to: Rebuild Local Prosperity; Make Transport Better; Develop a Net Zero Railway and Renew an Amazing Place.
GCRE is a 2021 Programme for Government commitment that builds naturally on the wider infrastructure strategy of the Welsh Government. The recently completed £2bn dualling of the A465 Heads of the Valleys Road will provide strategic support for the facility. An independent economic appraisal undertaken by PWC has highlighted that GCRE has the potential to create more than 1,100 jobs in its first decade, with the potential to contribute a £300m GVA uplift to the local and regional economy and £1.2bn over its lifetime. It reported that for every £1 spent developing the GCRE project, £15 is returned in wider community, economic and rail industry benefit.
While, to date, no investment partner has yet been able to commit the private funding needed, feedback from the market is that the GCRE project is viable and can be progressed. A market review over the summer made it clear that to secure investment the company needs to provide greater certainty about the final construction costs and confidence about investment viability in the early years commercial operation of the business.
Welsh Government support will be needed to put both of these measures in place.
I have discussed these issues in detail with GCRE and want to work with the company to help it secure private investment. As indicated in my letter to the Senedd Economy, Trade and Rural Affairs Committee of 21st October, as a government we are prepared to explore how the GCRE project can be further de-risked by virtue of additional public funding or the provision of a guarantee in order to secure the private capital funding necessary to take the project forward. Despite the challenges, the Welsh Government still firmly believes in the project and is ready to work with the business to address the barriers identified by private investors to date.
The Welsh Government has therefore provided funding to cover the capital requirements for design and development work over the next 6 months, preparing for Early Contractor Involvement (ECI) in detailed design, working towards a fixed construction cost.
In parallel to this, GCRE is also seeking an Energy and Data Centre Partner (EDCP). The appointed EDCP will work with GCRE to harness the site’s significant renewable energy potential and develop a major data centre offering at the site, alongside the railway.
Combined, all of these strands of work will allow the next Welsh Government to consider a Final Investment Decision on GCRE in 2027.
GCRE remains a strategic priority for the Welsh Government, offering transformative potential for the coalfield communities of South West Wales that can position Wales as a European and global leader in rail innovation.
GCRE is an example of the type of creative and active government approach that can help to tackle some of the most stubborn productivity and growth challenges in the northern coalfield of South West Wales and this Government’s aim is to put the project into the strongest possible position for the next Welsh Government to consider.
I will continue to keep Members informed as this important work progresses.