British Steel has announced a £1.25bn plan to replace two blast furnaces in Scunthorpe, a move that would further reshape the UK steel industry and could eventually threaten the jobs of up to 2,000 steelworkers.
The company, owned by China’s Jingye, on Monday informed workers that it proposed to replace the blast furnaces with greener electric arc models, rejecting the possibility of capturing the carbon in a blow to the nascent British carbon-capture industry.
Under the proposals, the two blast furnaces at Scunthorpe, in North Lincolnshire, would be replaced by an electric arc furnace at Scunthorpe and another at a site in Teesside, North Yorkshire. That would mark the return of steelmaking to Redcar, where the blast furnace was demolished last year after its closure in 2015.
The investment would be “subject to appropriate support from the UK government”, the announcement said. British Steel is understood to be asking for £500m in financial support to match that given to its only UK rival, Tata Steel, which runs two blast furnaces at Port Talbot in south Wales.
Electric arc furnaces offer the ability to recycle scrap steel using clean electricity, unlike blast furnaces, which rely on coal, creating unavoidable carbon emissions.
Tata Steel, which operates the Port Talbot plant, is planning a similar shift, although it delayed an announcement last week. It is expected that 3,000 jobs will be lost under its plans.
Unions have estimated that as many as 2,000 fewer people could eventually be required to operate British Steel’s electric arc furnaces compared with blast furnaces, although the company has not yet told workers how many jobs could be affected.
However, unlike Tata Steel, British Steel said it was planning on “maintaining current operations until a transition to electric arc steelmaking”, with an ambitious aim of starting production in 2025. That would delay any job losses for at least two years.
British Steel believes it would be impossible to build a single large electric arc furnace at Scunthorpe because of problems with the electricity grid connection. A larger furnace would have to wait until at least 2034 for a suitable connection.
British Steel’s chief executive, Xijun Cao, said it had considered decarbonising the blast furnaces, which would probably require capturing the carbon and storing it under the North Sea. However, he said, “thorough analysis shows this is not viable”.
“Detailed studies show electrification could rapidly accelerate our journey to net zero and drive British Steel towards a sustainable future,” he added. “It would also ensure we can provide our customers with the steel they require.”
The unions have called for alternatives to the closure of blast furnaces, including the creation of direct reduced iron plants that make iron from ore using green hydrogen rather than dirty coal. Electric arc furnaces cannot create steel from iron ore, relying instead on recycled scrap, and they cannot make the highest-grade steel that the automotive and aerospace industries rely on.
Roy Rickhuss, the general secretary of the Community steelworkers’ union, said the closure of Britain’s blast furnaces “would leave the UK unable to make steel from raw materials and dangerously exposed to international markets”.
Charlotte Brumpton-Childs, a national officer at GMB, a union representing steelworkers, called for a plan to decarbonise the industry “in a way that protects virgin steelmaking in the UK and the jobs it supports”.
Jonathan Reynolds, Labour’s shadow business secretary, said the government “would leave the UK unable to produce any primary steel products right at the time when the entire world will be demanding these goods for the net-zero transition”.
Scunthorpe’s Conservative MP, Holly Mumby-Croft, said she opposed the move and had asked Rishi Sunak to intervene to save the blast furnaces.
“British Steel is privately owned and free to make business decisions, but if they want hundreds of millions of pounds of government support, then the government should use that investment to secure steel jobs and our sovereign capability to produce steel using blast furnaces,” she said.
However, MPs for Teesside constituencies were delighted. Jacob Young, the Conservative MP who won Redcar in 2019, said it was “a truly historic moment”.
“I am immensely proud to see our community taking this significant stride forward, ensuring that the steel industry, which was the backbone of our economy for generations, will continue to thrive for many more to come,” he said.
The prime minister’s spokesperson said the government had “offered a generous support package including £300m of investment for British Steel to cut emissions, safeguard jobs and unlock over £1bn in stakeholder investment”.
