British Steel is preparing to eliminate as many as 2,000 positions as part of its furnace closure scheme

07 Nov, 2023

British Steel is preparing to eliminate as many as 2,000 positions as part of its furnace closure scheme

British Steel is set to replace its existing blast furnaces with two electric arc furnaces, one located in Scunthorpe and the other in Teesside. The company's £1.25 billion proposal aims to transform British Steel into a "clean, green, and sustainable business." However, the plan is contingent on receiving appropriate support from the UK government.

The transition, scheduled to be completed by late 2025, is driven by British Steel's commitment to environmental sustainability. Chief Executive Xijun Cao explained that maintaining blast furnaces while meeting environmental obligations was not feasible, despite extensive consultations with the public and private sectors.

Unions estimate that the shift may result in the loss of 1,500 to 2,000 jobs, particularly in Scunthorpe. British Steel is collaborating with North Lincolnshire Council to develop a masterplan to attract new businesses and jobs to the vacant areas under the proposed scheme.

The UK's Department for Business and Trade sees the move as a part of a broader initiative to foster a greener and more sustainable future for the country's steel industry. The government has offered substantial support, including over £300 million in investments.

British Steel remains in negotiations with the government to determine the extent of support for its strategy. The company emphasizes the need for the UK to adopt appropriate policies and frameworks to back their decarbonization efforts.

The transition from blast furnaces to electric arc furnaces signifies a substantial shift in steel production. Blast furnaces use coke in the production of "virgin" steel, a process that generates carbon dioxide. In contrast, electric arc furnaces are primarily used to melt down and recycle scrap steel. The end product is not of the same grade as steel produced in blast furnaces and may not be suitable for all industrial applications. However, arc furnaces can be powered by electricity, including renewable sources.

Unions have expressed concerns about the transition timeline and pledged to examine British Steel's proposals in detail. They perceive the plans as risky and unwise. Paul Nowak, General Secretary of the Trades Union Congress, and Roy Rickhuss, General Secretary of Community, have both raised concerns about the impact on the UK steel industry and the potential vulnerability to international markets.

UK Steel, the industry body, views the announcement as a pivotal moment for the UK's major steel producers, as they work towards achieving decarbonization by 2035. Critics, however, contend that the shift from blast furnaces to electric arc furnaces may not lead to an overall reduction in carbon emissions but could merely transfer them if the UK relies on purchasing virgin steel produced via traditional processes from foreign plants.

Steel production is responsible for approximately 7% of global greenhouse gas emissions, and some countries are exploring low-emission methods utilizing hydrogen.

The closure of the blast furnaces will have a significant impact on Scunthorpe, where the steelworks have been a prominent part of the town's landscape for over five decades, employing generations of local workers. British Steel, the UK's second-largest steel manufacturer, was acquired by China's Jingye Group in 2019, with promises of substantial investments. However, earlier this year, the company declared its coking oven's closure, citing uncompetitiveness in the UK steel industry due to high energy, carbon, and labor costs.