The UK’s steel industry has been in decline for decades, mainly because of competition from abroad where cheaper labour and energy costs are the norm. But the reason that decline has accelerated recently is down to one thing – you cannot make steel on an industrial scale and profitably without burning coal. The UK will not countenance burning coal so steel cannot be made here.
You miss out a key factor here, which is iron ore.
The UK steel industry has been in decline for decades, but the main reason for that is because the UK does not, and never had, a decent supply of high quality domestically sourced iron ore.
Given the costs of mining and transportation, locations with lots of high quality iron ore available locally will, other things being equal, be able to make steel more cheaply from iron ore than locations that don't. Other things aren't equal, the energy and labour costs do matter, but they are secondary. The UK steel industry would need very cheap coal and labour to overcome the handicap of not having high quality iron ore nearby.
In the 1970s the UK steel industry tried to get round this by switching from domestically sourced low grade ore (eg High Dyke to Scunthorpe) to importing higher grade ore (eg Scunthorpe's ore coming in through Immingham), but it was only ever going to be a temporary solution.
Economically the UK steel industry can't compete by importing iron ore and making steel in a blast furnace with lots of expensive labour, the coal issue is irrelevant. But the UK can make steel by recycling in an electric arc furnace, especially if it can get cheap electricity from renewables and use less labour, and that's what is being proposed for Port Talbot.
But the main reason for the UK retaining a domestic steel industry is strategic, not economic. And a domestic steel industry that relies on imported iron ore does not meet the strategic objective, all the enemy has to do is sink the ships carrying the iron ore.