The opposition Labour Party has called on UK business and trade secretary Kemi Badenoch to report to Parliament by 27 February with an assessment of the impact on the UK of the loss of primary steel production capabilities.
In an intriguing year for both the UK’s steel industry and politics, Tata Steel has confirmed the closure of both Port Talbot blast furnaces by end-2024 and commissioning of a 3 million tonnes/year capacity electric arc furnace by 2027. This follows a deal agreed with the Conservative government last year for £500 million ($636m) in funding.
The Competition and Markets Authority is due to publish a report on the grant’s compliance with the subsidy control requirements on 6 February.
The Labour Party however leads the polls and could win the next UK general election, which Prime Minister Rishi Sunak is expected to call in the second half of this year. Labour has pledged it would invest up to £3 billion over ten years to decarbonise the steel industry, Kallanish notes.
The UK government allowing blast furnace no.4 at Port Talbot to close is “an act of economic vandalism” and sends a message that “decarbonisation effectively means deindustrialisation”, says UK shadow secretary of state for business, energy and industrial strategy Jonathan Reynolds.
“The claim that 90% of what Port Talbot does could be met with an electric arc furnace does not stand up, as key products in packaging and automotive materials cannot be produced in one,” Reynolds told a House of Commons debate on Tuesday.
Addressing UK industry and economic security minister Nusrat Ghani, Reynolds added: “I am asking the Minister – quite honestly, I am begging her – to consider the arguments and what is really value for money, and not to make decisions that are irreversible and prevent a far better outcome in future.”
The UK’s other primary steelmaker, British Steel, meanwhile remains in talks with the government to agree funding following its proposal announced last November to replace its blast furnace with two EAFs. The plan has been criticised by unions, who will be closely watching developments at Port Talbot.
Holly Mumby-Croft, Member of Parliament for Scunthorpe, where British Steel is located, said: “I have no problem with building electric arc furnaces – it is a good idea – but I passionately believe that the UK should retain, at least in the medium term, some blast furnace capability alongside that. After the sad news in Port Talbot, that has to be in Scunthorpe.”
“If we are to give British Steel hundreds of millions of pounds of public money, we need to ensure that it retains those blast furnaces until the transition. In short, that must be written into the deal,” she added.
Some concern has been raised about the UK not being able to supply its own steel for defence purposes were it to lose primary steelmaking capability. UK Secretary of State for Wales David Davies however pointed out that Port Talbot does not supply the defence industry, which sources steel from Sheffield Forgemasters, produced in an EAF.
In the Welsh Parliament on Tuesday, First Minister of Wales Mark Drakeford said his government did not agree with the blast furnace no.4 closure and called the alternative Syndex/multi-union plan credible. This proposes to keep the 2m t/y BF4 running while the new EAF is built, and thereafter until 2032.
Welsh economy minister Vaughan Gething pointed out there is a contrast between the UK approach and the more favourable one being taken by the Netherlands government towards investment in hydrogen and direct reduced iron making. Tata contracted in 2022 Danieli and Hatch to provide an engineering package for the transition to hydrogen-based DRI-EAF steelmaking at its IJmuiden plant.
On Wednesday during Prime Minister’s Questions, meanwhile, UK PM Rishi Sunak stressed that 8,000 jobs had been on the line at Tata Steel UK, far in excess of the 2,800 slated to go. “Because of the government’s investment and support, and partnership with Tata, we have safeguarded 5,000 direct jobs, thousands more in the supply chain, and ensured the long-term sustainability of that steel plant.”
Tata Steel published its December-quarter earnings on Wednesday, showing that its UK business posted 720,000 tonnes of liquid steel output and 640,000t of deliveries, flat and down 3% on-year respectively. Revenue was down 12% to INR 6,294 crores ($757 million) and Ebitda loss deepened 12% to INR 1,657 crores.
Adam Smith Poland