The parlous state of the UK steel industry could be transformed if ministers invested in innovative techniques to upcycle steel scrap by switching from blast to arc furnaces, according to a leading academic.
A six-year research project concluded that the global market for recycled steel with grow at least threefold in the next 30 years, and the UK has a ready stock of scrap because it was one of the earliest industrialised nations.
It also argued that this could help shift the market from a low-margin industry making plates, bars and coils to high-margin manufacture of finished products.
The report, A Bright Future for UK Steel: a strategy for innovation and leadership through up-cycling and integration, has been written by Professor Julian Allwood of Cambridge University’s engineering department.
Allwood drew on evidence from the work of 15 researchers funded by the Engineering and Physical Sciences Research Council and industrial partners across the global steel supply chain.
“Tata Steel is pulling out of the UK, for good reason, and there are few, if any, willing buyers,” said Allwood. “The UK steel industry is in grave jeopardy, and it appears that taxpayers must either subsidise a purchase or accept closure and job losses.
“However, we believe there is a third option, which would allow a transformation of the UK’s steel industry.”
Allwood argues that, although 90% of steel is recycled in the UK, the processes are out of date and the quality of end-products is generally low – typically reinforcing bar (rebar).
He says the UK’s strengths in materials innovation could be applied to upcycle old steel to modern high-tech compositions.
“The steel industry fails to capture the value and innovation potential from making final components,” said Allwood. “The makers of liquid steel [in arc furnaces] could instead connect directly to final customer requirements.”
UK taxpayers may well have bear the financial impact of the Tata closures: it is estimated that the loss of tax income and payment of benefits will cost £300m-£800m a year, depending on knock-on job losses.
Allwood believes that a loan investment of up to £2bn could help generate the new industrial technology in three to five years.
“Rapid action now to initiate working groups on the materials technologies, business model innovations, financing and management of the proposed transformation could convert this vision to a plan for action before the decision for plant closure or subsidised sale is finalised,” he said. “This is worth taking a real shot on.”
Earlier this month it was reported that Sanjeev Gupta, managing director of Liberty House, suggested that Tata’s Port Talbot steel works could be saved from closure by switching to arc furnaces and processing recycled steel.