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4 minute read - 6th November 2023

British Steel unveils £1.25bn investment proposal for sustainable future but job cuts expected

British Steel has unveiled plans for the biggest transformation in its history – a £1.25bn investment proposal to become a clean, green and sustainable business by adopting electric arc furnace steelmaking.

Following detailed analysis of its current operations, available technology, and challenging market conditions, the company is proposing to accelerate its decarbonisation programme. The proposals, which are still subject to appropriate support from the UK government, could see British Steel install two electric arc furnaces (EAFs) – the first at its headquarters in Scunthorpe, the second at its manufacturing site in Teesside.

The new furnaces could be operational by late 2025 and would replace the aging iron and steelmaking operations in Scunthorpe which are responsible for the vast majority of the company’s CO2 emissions. The company proposes maintaining current operations until a transition to electric arc steelmaking.

British Steel has unveiled plans to invest £1.25bn – accelerating its decarbonisation programme with electric arc furnaces – but job cuts are expected / Picture: British Steel

British Steel says it has started preliminary talks with trade unions about electrification, and has promised to support employees affected by the decarbonisation plans. The jobs of reportedly up to 2,000 steelworkers at Scunthorpe plant are potentially now at risk. It has agreed for its proposals to be reviewed by an external specialist on behalf of the trade unions. The company said it is also working with North Lincolnshire Council on a masterplan to attract new businesses and jobs to the Scunthorpe site, parts of which could become vacant if the proposals go ahead.

British Steel CEO and president, Xijun Cao, said: “Decarbonisation is a major challenge for our business but we are committed to manufacturing the home-made, low-embedded carbon steel the UK needs. We have engaged extensively with the public and private sector to understand the feasibility of producing net zero steel with our current blast furnace operations. However, 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. It would also ensure we can provide our customers with the steel they require. Our owners, Jingye, have already invested £330 million in British Steel in just three years and they’re committed to the unprecedented investment our proposals require.

“We studied having one large electric arc furnace based in Scunthorpe, one which was capable of manufacturing all of the steel we require for our rolling mills in the Humber and the North East. However, such a large furnace would require a new National Grid connection and it is anticipated this would not be available until 2034. We therefore believe the most viable and timely option is to have two smaller furnaces which combine to produce the volumes of steel we require.”

British Steel says it would be the biggest transformation in its history, becoming a clean, green and sustainable business by adopting electric arc furnace steelmaking / Picture: British Steel

British Steel unveiled its Low-Carbon Roadmap in October 2021, pledging to invest in a range of technologies to deliver net zero steel by 2050, and significantly reduce its CO2 intensity by 2030 and 2035. However, the company is now proposing to accelerate its decarbonisation journey with the potential new operating structure able to reduce its CO2 intensity by around 75%.

British Steel has conducted feasibility studies into introducing EAFs to Scunthorpe and Teesside, and discussed the potential changes to its operations with North Lincolnshire Council, Redcar and Cleveland Borough Council and the Tees Valley Combined Authority. Because of the need to decarbonise its operations at pace, and the planning processes required, the company expects to shortly be submitting Environmental Impact Assessments to the relevant authorities. This would enable British Steel to meet appropriate timeframes should it decide to press ahead with the proposals and it be successful in securing planning approvals.

British Steel’s current operations

British Steel’s main manufacturing base is in Scunthorpe where it has blast furnaces that make iron, and a basic oxygen steelmaking plant which converts the iron into steel. At the same site it has mills which roll semi-finished steel into finished products – rail, wire rod and constructional sections.

In Lackenby, near Redcar, it also operates Teesside Beam Mill which makes constructional steel while nearby, at Skinningrove, it has another mill that makes Special Profiles. The feedstock for both mills, semi-finished steel, is manufactured in Scunthorpe.

British Steel’s proposed future operations

Under the proposals, the new steel plant at Scunthorpe would consist of one 130-tonne electric arc furnace, two 130-tonne ladle furnaces, one 130-tonne degasser and two continuous casters.

The new steel plant at Teesside would consist of one 100-tonne electric arc furnace, one 100-tonne ladle furnace, one 100-tonne vacuum degasser and two continuous casters to supply Teesside Beam Mill and Skinningrove.

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