The founder of commodities firm Liberty House will tomorrow night fly into the UK ready to meet Government officials and Tata to gauge their support for a proposal to keep Britain’s largest steel plant open.
The entrepreneur, who has saved a number of British steel plants and mills from the industry’s unfolding crisis, has submitted preliminary proposals to the Government to replace Port Talbot’s traditional blast furnaces with modern electric arc furnaces, used to produce raw steel by melting scrap.
I’ll agree that I’ve not read everything written by everybody on this but as far as I’m aware I’m the only person in the press (assuming The Guardian from a few years ago and Forbes today qualify) who has actually made this point.
It’s the blast furnaces that are dead and gone, not the steel industry.
“The entrepreneur, who has saved a number of British steel plants and mills from the industry’s unfolding crisis, has submitted preliminary proposals to the Government to replace Port Talbot’s traditional blast furnaces with modern electric arc furnaces, used to produce raw steel by melting scrap.”
I’m confused – if he has a plan to ‘save’ the steel plants, why is he going hat in hand to the government? Why doesn’t he just go and do it?
Is it because he *doesn’t* have that plan but he does have plan that will keep those plants open a bit longer – and it involves the government handing over oodles of other people’s cash?
“Is it because he *doesn’t* have that plan but he does have plan that will keep those plants open a bit longer – and it involves the government handing over oodles of other people’s cash?”
Because like any good businessman, he sees an opportunity – namely that the government has gotten itself into a complete mess and is likely to throw money at someone, anyone, who can make the problem disappear, if only for a year or two. The perennial politicians ‘kick the can down the road’ solution. Presumably State money thrown at new electric arc furnaces will get past the EU as ‘restructuring’ or ‘technological improvements’ or suchlike.
Even if he could make the plan fly on its own, why pass up the opportunity to take some free money that the politicians are almost begging someone to take?
If the point is that Tim is the only UK journalist arguing (correctly) that blast furnaces have to go, then I think he’s right on that, and he deserves a big gloat imv.
Letting the virgin steel making close, doing something quick about high UK electricity costs, and hoping buyers move in for the rest of the steel businesses is the best the UK can hope for.
Liberty House took a couple of Scottish plants off of Tata in a deal ‘brokered’ by the Scottish government only last month. Allegedly it won’t directly cost the cost the taxpayer up there up a thing.
http://www.theguardian.com/business/2016/mar/24/tata-scottish-steel-works-rescued-by-liberty-house
I fell foul of the Sunday hangover fail syndrome in due diligence earlier today wrt steel manufacturing figures I tweeted.
For all the EU-28 steel production in 2014, the ratio of Steel Scrap vs Crude Steel is 53.9%. I presume they mean the ratio of steel derived from ore vs recycled steel.
The whole Spiel is here
http://bdsv.org/downloads/weltstatistik_2010_2014.pdf
When the industry was being taken over by the Bessemer furnace there were probable people crying out in protest at the fate of the pudding furnace foundries.
Can someone that knows more about the steel industry tell me where we get virgin steel without blast furnaces?
If the answer is to buy it from China then how long would it take to build a new blast furnace from scratch should the Chinese supply be cut off?
If new blast furnaces, or a newer technology that is better at making virgin steel can be built and running in a short time frame, say six months, then there is no point in saving the old plants. If it would take 5 years to replace the capacity then it worth the money to keep the plants for strategic reasons. Strategic concerns become much more pressing if Brexit passes thanks to the added possible uncertainties.
I’m tempted to ask where the electricity to run these electric arc furnesses is going to come from, given the government’s determined efforts to close down most of our electric generating infastructure…
theProle: you got in before me. They can fuck off with their arc furnaces if we’re going to be on planned power cuts a couple of years down the road.
With so much of the energy used by furnaces just wasted in getting them to temperature at least there is an electron sink when the wind is blowing at the right speed. I can’t see it being economical but at least we’ll be able to dump extra power somewhere when it’s not needed.
I’m still looking for the answer on what replaces blast furnaces for making virgin steel.
With so much of the energy used by furnaces just wasted in getting them to temperature
Wha? How is that wasted energy?
When the wind slows there is no more electricity for the furnace so it gets shut off.
I’m assuming that I haven’t missed the British electrical grid dumping wind power for something that is reliable. How does an electric furnace function without a stable grid?
“what replaces blast furnaces for making virgin steel?”
It’s an odd question as virgin steel comes from iron ore ( coke and limestone also involved ). The UK mines no iron ore. North America produces a little in Minnesota ( mainly Taconite ) and in Labrador. But Australia and Brazil produce the most by far. But whatever process you use to convert ore into virgin steel is going to require an energy input, so will be a furnace of some kind.
Even more recycling of steel is the future though, provided electricity costs are kept sensible.
LY,
We enter need new steel because so mch of it is recycled and there’s already a glut.
“Steel is the most recycled material on the planet, more than all other materials combined. Steel retains an extremely high overall recycling rate, which in 2012, stood at 88 percent.
The amazing metallurgical properties of steel allow it to be recycled continually with no degradation in performance, and from one product to another.
The sources for steel scrap are plentiful, but are classified into three main categories: home scrap, prompt scrap and obsolete scrap.”
http://www.steel.org/sustainability/steel-recycling.aspx
So in peace time we are able to recover 88% of the steel used. That’s a great fact but what happens if the current grumblings about China escalate?
From the economic standpoint I see no problem with just buying the cheaper Chinese virgin steel. The only reason that the government should step in is strategic. If the existing infrastructure can be replaced fairly quickly then there is no problem. If replacing the means of production would take years then keeping the old plants makes sense. We want to avoid a situation akin to Ponyets’s takeover of Askone happening in real life.
Except that you already recover 88% of the steel used. Quite simply, you have no *need* for virgin steel – at least not for the first couple of years of any potential *massive scale* war with someone that China is willing to stop selling to you to placate.
Plus, as has been pointed out – where you gonna get the iron ore to make that new steel from? Anything coming from Australia will be interdicted.
My understanding is that there is still plenty of ore in Minnesota but it is less economical to process.
If you read the American news all of the talk is about how dangerous China is. Given the track record of US government I can easily see the war being with China in a few years. If the US goes to war with China do you really think that China will sell our allies anything that could be used against them?
@Liberal Yank
You can’t sensibly cycle an electric arc furnace based on what the wind is doing. You can probably afford to peak lop a little (knock it off for a few minutes when UK demand is at a maximum), but turning it off for a prolonged period (as when the wind doesn’t blow for several cold days in the middle of winter) is a non-starter.
Existing coke fed blast furnaces don’t require much electricity going into the site – they produce lots of waste flammable gas (as does the coking process to get the coke) and usually “waste” gas is burnt on site in fairly sizable power stations. I’m not familiar with Port Talbot, but I’ve worked on CPS at Scummy and it saves them a lot of money (and also is set up as black start capable – I.e if the site’s main grid connection fails, there is a process starting from a couple of lorry batteries to start a gas turbine which provides enough power to start up Central Power Station etc etc).
If they go electric arc furnace only then it means that instead of running the whole site basically off cheap coal they will be using expensive electricity (which we don’t have the capacity to generate anyway) for everything.
I should have used a sarcasm tag. Large scale wind power is useless without major improvements in energy storage. Wind can work in specialty cases but powering a modern nation on it is just plain stupid.
As I understand it the coke provides the carbon needed to turn iron ore into steel. Varying the types of coal used to make coke is one of the affects the carbon content of the steel and so is a valuable tool for industry.
It’s been decades since my coke plant tour in college. I’m sure there have been developments since I saw that WWII era plant. As I don’t know what has changed I will stand by local obsolete blast furnaces until I know that there is a valid alternative to provide virgin steel.
Given the Port Talbot site, and other blast furnace sites, are set up to handle coal they would be ideally placed for new power stations to power the arc furnaces and local communities. Germany is building coal power stations why aren’t we? Knowing our lot they’ll see the bulk material handling equipment as ideal for biomass instead…
Or maybe the coke ovens could produce town gas for a gas turbine power station and the coke for a coke power station.(Would the emissions be less overall? The gas would be cleaner than coal but no way near as clean as natural gas. Coke would be hotter and more efficient than coal too?)
Our local fly ash contains a decent concentration of radioactive elements. It should be possible to reprocess that waste and get some usable nuclear fuel. Add a module Gen IV nuclear set up to the mix and one of the largest remaining waste issues is solved.
I see the beginnings of a plan.