The future of Tata’s Port Talbot steelworks has become emblematic of the UK steel industry as a whole. In March the company announced it would exit the UK because Port Talbot was losing £1m a day thanks to China ‘dumping’ cheap steel on EU markets.
The news led to outcry from across the industry and calls for greater Government intervention. It also unsettled metals recyclers, who warned that the plant’s closure would exacerbate the growing export trends.
In May, Tata rejected a bid by the Liberty House Group to take on Port Talbot and replace the existing blast furnaces with electric arc, with the intention of using scrap metal to produce advanced engineering products. This was part of the company’s Greensteel project, which has the strapline: “100% manufactured from steel scrap using local energy.”
Liberty House drafted in Julian Allwood, professor of engineering at Cambridge University, as an external adviser. A report written by Allwood, A Bright Future for UK Steel, makes a case for developing a closed-loop system to upcycle recycled steel. But this would need better segregation of scrap and better design to filter out contaminants such as copper, which is very difficult to remove from melted steel.
Arc furnaces can be fed by scrap metal exclusively, unlike blast furnaces that typically take only up to 22% of recycled metal – so should UK recyclers be hopeful that Liberty House’s strategy will win out?
According to trade body UK Steel director Gareth Stace, Allwood’s report has been welcomed, but he warns that anyone reading it and coming to the conclusion that all blast furnaces can be ditched is getting the wrong idea.
“The global steel sector will [always] need a certain amount of virgin steel to come into the market,” he says. Stace does share the view that arc furnaces can be used more for high-quality products: “I remember when I first joined the sector, someone saying ‘long products like heavy section girders need electric arc furnaces but flat products use blast furnaces – and that cannot change’. Julian’s report is questioning that.
“In 2015, mills in the UK used about two million tonnes of scrap, but then we exported seven million tonnes. As the availability of quality scrap has developed, we can see more and more products potentially being made by arc furnaces.”
For Stace, if the industry does move away from blast furnaces, it should be done step-by-step.
“I’m sure any steel company in the UK will be thinking the same, even perhaps in Scunthorpe, where they have four blast furnaces [British Steel bought the site from Tata in April]. When they have to make further investment in any one of those furnaces, I’m sure they will consider electric arc.”
But, as Allwood points out, to make the arc furnace route work there will need to be a purer stream of secondary material available.
“I think the market is developing that way even without the circular economy package,” says Stace. “European metals recyclers and others are moving forward in that technology significantly in terms of being able to segregate.”
In July, UK Steel launched a manifesto outlining its plan to secure a long-term future for the industry. It called on the Government to take action over what it says are “disproportionately high energy prices” in the UK. Its analysis shows that electric arc furnace operators in the UK currently pay £17 per MWh more than operators in Germany – equating to around £50m additional cost overall.
A small upturn in metals prices has helped Tata to hold off closing Port Talbot. The company is also in talks with Germany-based conglomerate Thyssen Krupps on a merger that could secure the plant, but its future at this point is still very uncertain.
Stace is not talking about ‘green shoots’ of recovery quite yet: “There is still massive overcapacity globally. The lower value of sterling is helping exports and we are, I hope, in a slightly better place than we were six months ago. We still have a long way to go.”
VIEW FROM THE BMRA
“I think there would be an opportunity [to extend the use of arc furnaces]. But of course it’s a trade off with cost in terms of extra processing or extra sorting.
“An awful lot of the material that comes out of industry – for example, all the cuttings and offcuts from making car bodies and things like that – it’s all one alloy, it’s absolutely clean and is absolutely furnace ready. It has a big benefit to it because it’s got far less energy when you reprocess it compared with doing primary.”
Robert Fell, chief executive of the British Metals Recycling Association