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More recycled steel will have to be exported

Handbook steel bundles

A flurry of catastrophic announcements for steel workers at SSI, Tata Steel and Caparo catapulted the UK steel industry on to newspaper front pages in October 2015.

With more than 5,000 jobs expected to be lost, headlines on ‘British steel in crisis’ brought the market into greater public focus and sent journalists scurrying for answers.

Many explanations emerged. From Chinese oversupply and high electricity prices to the strength of the pound, green taxation and even the rate of steel recycling – a range of factors were blamed.

What was lost in the scramble, perhaps understandably given the tragedy of the situation for affected workers, was the context of the likely effects on the wider UK metals market and the changing landscape across the globe.

The triple blow from the SSI, Tata and Caparo announcements weakened the UK ferrous metals market, affecting prices and meaning that as much as 80% of our recycled metal will now have to be exported.

With technology continually unlocking the money-making potential of recyclables, this will be viewed as a backwards step.

The British Metals Recycling Association (BMRA) called for the Government and the EU to consider the provision of incentives for steel-makers to use recycled metal, such as an economic ‘pull’ mechanism but none, so far, have been forthcoming.

But a perfect storm of this nature, and the consequent lack of market confidence, risks distracting from other significant developments.

While the European Commission’s revised circular economy (CE) package – which was yet to be published at the time of writing – will focus on increasing recycling target rates, it seems likely that the proposal may not prescribe any measures such as tax incentives to boost the market for secondary raw materials. Such an approach would be seen by many as an opportunity missed to drive change and embed an effective recycling-based economy across Europe and beyond.

Nevertheless, the focus on recycling should increase fundamentally the desirability of metals as a packaging material because they stack up well compared with plastic and other rivals.

In fact, the CE package should act as a further catalyst for cultural changes in both manufacturer and consumer behaviour as the CE ethos filters down. But for that to happen in the UK, there needs to be a greater recognition and prioritisation of these principles at a parliamentary level.

The CE focus will no doubt trigger wider debate on fundamental issues of how the world uses its diminishing natural resources. What the metals industry must remember is that it is in a prime position to lead the debates and dictate the agenda rather than allow it to be set for us.

Closer to home, in 2015 we saw legislation on metals recycling, with Scotland introducing the Air Weapons and Licensing Act. Similar to the Scrap Metal Dealers Act, it banned cash payments for scrap and a requirement for buyers to secure and record the ID of sellers. Throughout the process, the BMRA worked closely with the Scottish Government to secure the best deal possible for members as part of the bill, securing a number of concessions.

As happened when the bill was introduced in England, the BMRA will push to ensure that the law is enforced vigorously by councils, the police and the Environment Agency to ensure that illegal operators do not go unpunished and achieve advantages over our members. Further clarity on acceptable payment methods was also included.

While we did not secure agreement on every suggestion within our consultation responses, it shows the vital role that industry can play in influencing policy and, in effect, advising the Government. It will not always listen, of course.

Nonetheless, with a tricky time ahead and the potential gains for the entire metals industry provided by the CE package on the horizon, it is more vital than ever that we make our voices heard.

Ian Hetherington is director general of the British Metals Recycling Association

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