My word, Timmy was right

Sanjeev Gupta, the businessman at the centre of efforts to salvage the Welsh steel industry, says any plan to buy Tata’s operation will aim to avoid mass redundancies but will end blast furnace steelmaking at Port Talbot.

Amazing what you can work out if you actually understand the basics of an industry, isn’t it?

But in words aimed at reassuring a nervous workforce, he said he would only become involved if he was able to avoid mass redundancies, “transitioning” the 4,000 blast furnace workers into new roles in the industry.
In an interview with the BBC Today programme, he expressed confidence for the rolling mills and the downstream businesses, and not just the specialist production lines as had been suggested.

22 thoughts on “My word, Timmy was right”

  1. The Inimitable Steve

    Sanjeev Gupta is an interesting guy:

    At 12 he was sent to a boarding school at Canterbury, Kent, spending a gap year selling Victor bicycles in Turkey after A levels.

    Then he went to Trinity College, Cambridge, to study economics and management. While at university he set up a commodities trading business called Liberty House, using his student halls of residence flat as his office.

    This got him into trouble with the university authorities when he used the address for a VAT claim, breaching the university’s charitable status. He was hauled up in front a panel of dons who told him he had to leave the residences.

    But he continued to run the business from his new digs and went on to graduate with a 2.1.

    Since 1992 Mr Gupta has grown Liberty House into a business with a £4.2bn turnover, employing more than 2,000 around the world. Its activities range from steel making to renewable energy, financial services and property.

    But I fear this is snouts-in-trough crony capitalism:

    His family’s Simec business also owns the Uskmouth power station, a coal-fired generating station that they plan to convert to biomass.

    And Liberty also owns a stake in Tidal Lagoon Power, the company behind the planned Swansea Bay tidal lagoon.

    It has also just recently bought Tata’s two rolling mills at Clydebridge and Dalzell in Scotland, facilitated by a temporary ‘nationalisation’ by the Scottish Government.

    Seems he’s already doing very well out of UK taxpayers. More the fool us if we send him even more cash to keep unprofitable businesses going.

  2. So Much For Subtlety

    This is obviously one of these new-fangled devolved things.

    Any requests for cash ought to be sent to the Welsh Assembly. I am more than happy for the Welsh taxpayers to line the pockets of some South Asian Arthur Daley. Because working class communities have solidarity or whatever.

  3. I would hope that any visitor to this blog understands the short term economic reasons for closing the blast furnaces.

    I am still looking for information on how long it would take to rebuild a blast furnace from scratch when circumstances change. The most recent searches contain plenty of information about minecrack. Does anyone knows how long it takes to go from shovel ready to 15,000 tons a day of virgin steel?

    Finally are electric furnaces a good idea in a country that is removing stable power plants for windmills? I would think the best ways to generate this electricity would be coal or nuclear while we save the hydro and gas for load balancing the damn wind turbines.

  4. At an overnight capital cost of $200/tonne, you will be looking at well north of a $bn dollars. Construction time for the furnace would probably be around a year After that, depends how much of the other equipment is built in parallel or sequentially, or is already available. I would think greenfield, getting one working would be not much less than 3 years.

    At the opposite end of the scale, if you wanted to retire a BF and re-open it in the future, BF 4 at Port Talbot took 4 months for re-lining, at a cost of about $250mm

  5. “Liberal Yank
    April 6, 2016 at 1:09 am

    I would hope that any visitor to this blog understands the short term economic reasons for closing the blast furnaces.

    I am still looking for information on how long it would take to rebuild a blast furnace from scratch when circumstances change. The most recent searches contain plenty of information about minecrack. Does anyone knows how long it takes to go from shovel ready to 15,000 tons a day of virgin steel?

    Finally are electric furnaces a good idea in a country that is removing stable power plants for windmills? I would think the best ways to generate this electricity would be coal or nuclear while we save the hydro and gas for load balancing the damn wind turbines.”

    And I am still looking for information as to why Britain would need blast furnaces and virgin steel *immediately* in that case of a war with China. You don’t need virgin steel for tank/warship/gun production.

    A war that is highly unlikely and . . . what? Are you expecting them to run tanks across the Fulda Gap? Are you thinking Liberty Ships across the Atlantic to resupply America? Do you think the Chinese – a *regional* power (if an extremely large one) can project enough naval force to close off the Atlantic?

  6. Rob,

    Thank you. For strategic concerns as long as the old furnace is in mothball it can be restarted in a fairly reasonable amount of time. For most cases three years to restart production is enough of a threat to keep foreign producers from undue gouging as seen in the rare earth kerfuffle.

    Agammamon,

    We are working on the same problem from different directions. I am trying to understand how long it takes to restart production. I am not questioning that there is a reserve of steel that can be recycled until new blast furnaces can begin production. I want to know how hard it would be to ensure that there is enough steel if, external supplies were shut off and, there was a sudden need to rebuild the British Navy?

    The US media has been full of saber rattling towards China. My concern is that people actually start to believe that there is a real threat and we do something stupid. The smartest people in the world do stupid things and we pick our leaders in a popularity contest. War is only highly unlikely if people remain rational which history shows is very rare.

    As to what to expect I admit I have no clue. The last two major wars between superpowers were long grinding affairs won by superior production. It makes sense to plan in case the nukes don’t wipe everyone out. Therefore it can* make sense to retain enough capacity in order to restart production, despite the added economic costs.

    * I am trying to understand if it does make sense. Until I can say for sure then I don’t get to tell you you’re an idiot for disagreeing with me.

  7. @Liberal Yank
    We no longer mine iron ore in the UK. It’s all imported. So why import iron ore for a loss making blast furnace when we can import steel or recycle it more cheaply.

    The unlikely geopolitical circumstances that would stop or inhibit importation of steel also apply to iron ore, so the blast furnaces have no “strategic” value anyway. In the Armageddon scenario you fear we would have kept the loss-making blast furnaces at vast expense but would have no iron ore to feed them.

  8. Liberal Yank

    a) You no longer mine ore – it’ll take you far longer to set up an internal iron ore supply than to set up the blast furnace for final processing.

    b) You have enough steel on hand to rebuild the British Navy several times over out of recycled scrap.

    It may be an interesting intellectual exercise, but there is simply no need to keep a furnace running in the strategic reserve even if it would take most of a decade to build a new one from scratch.

    You could just as well start trying to figure out how many oil wells, uranium mines, rare earths mines, etc you’ll need to rebuild that navy.

  9. I would think greenfield, getting one working would be not much less than 3 years.

    Yeah, 3 years would be my estimate too. 12-18 months for the engineering, early works construction starts 9 months in.

  10. want to know how hard it would be to ensure that there is enough steel if, external supplies were shut off and, there was a sudden need to rebuild the British Navy?

    It is irrelevant, as there will be many, many vital components to a modern warship which would have to be imported, not just steel.

  11. So Much For Subtlety

    Tim Newman – “It is irrelevant, as there will be many, many vital components to a modern warship which would have to be imported, not just steel.”

    It is irrelevant because the British Armed Forces are scrapping all physical requirements for serving in order to get more women into the services.

    In other words by the time the next war comes around, the British Armed Services will make Italians in World War Two look like Rommel’s finest Storm Troopers.

  12. It is irrelevant because the British Armed Forces are scrapping all physical requirements for serving in order to get more women into the services.

    Normally, the modern term is “citation needed.” In this case, I think you deserve “you’ve just made that up.”

  13. @SE. SMFS may well be guilty of hyperbole, but he is hideously close to the truth of the matter.

  14. So Much For Subtlety

    Surreptitious Evil – “Normally, the modern term is “citation needed.” In this case, I think you deserve “you’ve just made that up.””

    Knock yourself out.

    http://www.dailymail.co.uk/news/article-3521538/Army-fitness-tests-written-make-sure-female-soldiers-qualify-line-duty.html

    The Army is re-writing its fitness tests to make sure women can qualify for front line units once rules are changed this year, it was reported today.

    Physical differences between men and women will be recognised in the tests as Defence Secretary Michael Fallon prepares to sign off on plans to allow women into the most dangerous roles for the first time.

    Female soldiers are expected to be allowed to join close combat units, including the infantry and armoured regiments, for the first time from this summer.

    The reforms will come alongside changes to the Army’s physical training which is currently ‘optimised for male physiology’, the Sunday Times reported.

    The new standards will be introduced from 2019 and are intended to better balance the demands of a specific military role with the training given to the individual recruit.

    Research which has driven Mr Fallon’s expected decision found women were twice as likely to suffer musculoskeletal injuries during initial training.

    And analysis of recent Army recruits suggests only 30 women a year would pass the current physical standards for joining the front line units.

    A test that is designed to pass women is not designed to test if the candidate can do the job. This is banana republic stuff. Worse than that really.

  15. Thanks to Rob’s useful answers I can now say that the time to restart a mothballed BF is short enough for strategic needs. Three years for a greenfield site is not ideal but is good enough most plausible situations.

    The next question is what is the cost of maintaining a BF in mothball? I have been looking for information about the remaining BF at the Carrie Furnace site near Pittsburgh but so far I have no useful credible information. Hearsay is that nothing has been spent on maintenance in three decades. Urban explorer reports are that the BF looks ugly but still functional.

  16. So Much For Subtlety

    Surreptitious Evil – “None of that says what you said.”

    It is exactly what I said. The government wants women in the front line. They can’t pass the physical. They are going to get rid of the physical.

    Why you do not like and cannot face this is your business. But while you are entitled to your own opinions you are not entitled to your own facts.

  17. So Much For Subtlety

    Surreptitious Evil – “You know of a beautiful blast furnace?”

    We assume only natural scenes are beautiful. I am not sure why. But Blast Furnaces are awesome in the way that a giant waterfall is. They are functional and brutal, yes. But volcanoes are too.

    It doesn’t help that the buildings they are in tend to be dirty, run down and old. But a blast furnace is often beautiful in its own right. It is a two cultures thing.

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