Call for investment in British Steel

Call for investment in British Steel

The final decision to take British Steel fully under public ownership has been welcomed by REIDsteel managing director Simon Boyd OBE.

He applauded the move but warned that long-term investment was critical to propel the company to the forefront of steelmaking in the UK and worldwide.

Simon has previously lobbied to save the two remaining blast furnaces at British Steel’s plant in Scunthorpe.

The government took control of British Steel operations in Scunthorpe last year and announced today that it had formally taken it into public ownership from its former owner, Chinese firm Jingye.

Simon urged new PM Andy Burnham, business secretary Jonathan Reynolds and Chancellor John Healey to back British Steel.

He said: “Steel is an important strategic industry for the UK.

“It was necessary for the government to take control last April when it became clear that Jingye was deliberately sabotaging our ability to make our own steel.  

“If we had lost our steelmaking capability we would have become 100% reliant on imports which would have been catastrophic for our country, its infrastructure, national security and economy.

“It has taken far too long but I am very pleased now that the company is now fully in public ownership and belongs to the British people.

“To ensure the success of British Steel and UK steel making we must provide the investment needed to return UK steel making to the forefront of global steelmaking .

“This means investment now, that over the long term will return a profit for the British people; it will need vision and commitment. We must invest in a new state of the art blast furnace with supporting infrastructure and carbon capture technology to retain the ability to make virgin steel and an electric arc furnace to make good  the thousands of tonnes of recyclable scrap steel we produce in the UK.

“This will put us ahead of the competition and help make the UK the leading producer of the cleanest high grade steel in the world.

“We would not only be able to extend the lines that we can produce in the UK, we would also be able to produce more virgin steel for export as there is only enough scrap to cater for 30% of the world demand.

“Although it will take time, perhaps 10 years of investment and 20 years before we, the tax payer, gets a return, it is essential for the British people, the UK economy and our country.”

Parliament passed legislation allowing the government to bring British Steel into public ownership under circumstances where it met a public interest test on July 15.

In March, the National Audit Office released a report noting that the steelworks was costing the government about £1.3m a day.

Simon warned that sky-high energy costs, regulation and the damaging net zero agenda were stifling British Steel and the steel sector as well as the wider manufacturing, engineering and industrial sectors.

Contract specifications for low carbon levels in many UK infrastructure projects mean that British Steel products are often ruled out in favour of EAF steel – such as for the Net Zero Teesside (NZT) gas-powered electricity plant in the North East.

China’s Modern Heavy Industries was given the contract by NZT for part of the steel needed to build the facility because it can supply so called ‘green steel’ produced in electric arc furnaces (EAF) using scrap steel. 

The steel could have been made in British Steel’s own blast furnaces and rolled five minutes down the road from the new development in Teesside.

Simon said: “There’s a great irony in all of this.

“On the one hand, the government has taken British Steel into public ownership but its own net zero policies exclude the company from tendering for many projects in the UK, because the tenders insist on low carbon steel, which we cannot make in the UK.

“The dangerous madness of the race for net zero threatens to not only hamper the regeneration and growth of British Steel but also many other vital parts of the UK economy.”

The UK steel sector employs 34,000 people directly and supports a further 42,000 in supply chains, according to the UK Steel trade body.

It directly contributes £1.7 billion to UK economy and supports a further £2.3 billion.

Simon Boyd was made OBE in the New Year Honours for service to British steel manufacturing and Small and Medium Sized Enterprises (SMEs). He is regional chair of the Jobs Foundation and vice-president of Dorset Chamber of Commerce and Industry.