British Steel proposes closing Scunthorpe coke ovens to cut costs, emissions

UK integrated steelmaker British Steel said Feb. 22 it is proposing to close its coke ovens to cut costs and carbon emissions, in a move that could trim up to 260 jobs at the long products and rails producer.

Further “streamlining” and cost-cutting measures may also be taken, it said.

The coke ovens at the company’s Scunthorpe works are near the end of their operational life. The Chinese-owned steelmaker plans to continue integrated steelmaking through increased steel scrap usage and by adding ore-based metallics to its blast furnaces to displace iron ore, it said in a statement.

The proposal is part of a “drive to overcome global economic challenges and build a green and sustainable future,” British Steel said. “Decisive action is required because of the unprecedented rise in operating costs, surging inflation, and the need to improve environmental performance.”

British Steel said its bills for energy and carbon increased by GBP190 million ($230 million) last year, including an extra GBP120 million for energy and more than GBP70 million extra for annual carbon costs.

British Steel, the UK’s second biggest steelmaker, has a total steel products capacity of about 3 million mt/year. Production capacity won’t be impacted if the coke ovens close, a spokesperson said Feb. 22.

The date for proposed closure of the coke ovens—already discussed with trade unions—has not yet been confirmed. The proposals could lead to the loss of up to 260 roles at the company’s Scunthorpe site. In total at its various sites, British Steel employs more than 4,500 people, of which around 300 are in the Netherlands.

“Steel is vital to modern economies and with demand expected to grow over the coming decades, British Steel has a crucial role to play in ensuring the UK has its own supply of high-quality steel,” said British Steel CEO Xifeng Han.

British Steel’s owner, Jingye Steel Group, has invested GBP330 million in capital projects at the company, including modernization and decarbonization initiatives, since it acquired the business in March 2020, taking it out of liquidation. At that time the Chinese steelmaker pledged to invest around GBP1.2 billion to modernize and improve British Steel, including by construction of an electric arc furnace in Teesside, in the north of the UK.

“Jingye is committed to our long-term future, but decarbonization is a major challenge for our business and, like most companies, we’re facing significant challenges because of the economic slowdown, rising inflation, and exceptionally high energy prices,” British Steel’s statement said. “We have taken action to reduce costs within our control; however, steelmaking in the UK remains uncompetitive when compared to other international steelmakers. Our energy costs, carbon costs, and labor costs are some of the highest across the world, which are factors that we cannot influence directly.”

British Steel entered into talks with the UK government last summer to discuss potential support amid cost increases and the need to decarbonize. In January, the company told S&P Global Commodity Insights that government support was “required” for the successful decarbonization of British Steel. The steelmaker said Feb. 22 that it is “extremely grateful” for the government’s support, without giving details.

“It’s important we have the correct policies and frameworks in place to back our drive to become a clean, green, and successful company and we’re continuing to discuss this with the government. We are committed to working together and to [make] the home-made steel Britain needs for generations to come,” the steelmaker said in its statement.

Steelmaking is one of the UK’s biggest carbon emitters and is responsible for around 9% of carbon emissions globally.

Closure of the Scunthorpe coke ovens would bring environmental benefits including reductions in emissions to air and water, the steelmaker noted. British Steel unveiled a Low-Carbon Roadmap in October 2021 and is already undertaking several projects to improve its environmental performance.

Ore-based metallics

“Embracing new technology and ways of working will help our drive to reduce emissions and support clean growth,” Xifeng Han said. “We have increased the amount of scrap used in the integrated steelmaking route. In addition, we’ve started a project to add ore-based metallics to the blast furnace to displace iron ore and we manufacture a range of products with significant environmental benefits including high-strength structural steel and Zinoco rail.”

Major ongoing projects to improve British Steel’s product quality, range, and service since Jingye’s takeover include the installations of a GBP54 million billet caster and a GBP26 million mast service center, both scheduled to come online this year. A near GBP50 million upgrade to its wire rod mill continues, to be completed next year. Other investments include GBP30 million for new unloaders for British Steel’s port facility, GBP14.6 million for improvements in energy operations, GBP9 million for a new rail stocking facility, and GBP12 million to upgrade IT systems.

British Steel manufactures more than 1,450 different specifications of steel that is rolled into wire rod, sections, special profiles, rail, billet, bloom, and slab. Its headquarters is at its integrated steelworks in Scunthorpe, North Lincolnshire, where it has four blast furnaces, of which two are currently operational.

Its other facilities include the Teesside Beam Mill at Lackenby; Special Profiles at Skinningrove; and FN Steel in the Netherlands, as well as a port facility at Immingham Bulk Terminal and an R&D center at Sheffield.

— Diana Kinch