British Steel plans to close two blast furnaces on its flagship site in Lincolnshire within the next three-years and replace them with a less carbon intensive steelmaking technology. This could put up to 2,000 job opportunities at risk.
The second largest steelmaker in Britain, owned by China’s Jingye, announced that it would invest £1.25bn into the restructuring. This will include building two electric-arc furnaces. The first will be constructed at the main site in Scunthorpe, and the second at a facility already located at Teesside.
The company has committed to keeping the blast furnaces open until the new ones start up, which could be as late as 2025.
The unions claimed that the closure of Tata Steel’s UK blast furnaces would result in significant job losses, and the UK will be completely dependent on imported primary steel.
Roy Rickhuss is the general secretary of Community Steel Union. He said that workers are “deeply worried” about British Steel’s plans to only use electric arc furnaces at Scunthorpe & Teesside.
He added that “the plans announced by British Steel, in combination with Tata Steel, would leave the UK without the ability to produce steel from raw materials, and dangerously exposed on international markets.”
Electric arc furnaces are different from blast furnaces that use coke in order to make iron. Instead, they melt scrap steel and recycled steel. The electric arc furnaces are smaller than blast furnaces and emit less carbon dioxide. However, they are unable to produce the higher grade steels required by certain applications like carmaking.
Tata Steel announced in September that it would close two blast furnaces on its Port Talbot site in Wales, and instead build a large electric arc furnace. This was after the company received a support package of £500mn from the Welsh government.
Some industry experts think the UK should build “direct reduced iron plants” in conjunction with electric arc kilns. DRI plants use natural gas and, if available, green hydrogen produced from renewable electricity to reduce iron ore instead of coal.
The plans of British Steel and Tata Steel are “necessary, but not sufficient” to both decarbonise the industry and create a sustainable one that can meet the needs of the nation, said Chris McDonald.
He added that DRI was the “missing piece”. “The UK can probably get by with just one large DRI plant, or two, Port Talbot and Scunthorpe.”
British Steel announced that the proposed £1.25bn in investment is subject to a grant from the government. The company hopes to receive a package worth up to £500mn. This is more than the ministers’ offer of £300mn. British Steel claimed that its plans will reduce its carbon dioxide emission by 75%.
Xijun Cao said that British Steel was “committed” to producing the low-embedded, home-made carbon steel needed by the UK. He added, however, that the UK must “adopt now the correct policies and structures to support our decarbonisation effort”.
We are still in discussions with the government, and with its support we will continue to make the steel Britain requires for generations to come.
Labour Party, the UK opposition party, has announced that it will invest £3bn into the steel industry of the UK in the next decade, if they win the next elections. It criticised the Conservative government for its “sticking plaster” plans.
Jonathan Reynolds, the shadow business secretary, said that this would “leave Britain unable to manufacture any primary steel products at a time when the world will demand these goods for net zero transition”.
He added, “This isn’t a long-term plan that will benefit our steel industry. It will also make thousands of Scunthorpe workers redundant.”