The cost of keeping the UK’s last remaining blast furnaces going at British Steel’s Scunthorpe plant could exceed £1.5bn by 2028 if it continues at its current rate, according to the government’s spending watchdog.
Ministers took the plant into public control in April last year, after its Chinese owner – industrial firm Jingye – threatened to shut down the loss-making site.
The National Audit Office (NAO), which monitors state spending, said the intervention saved thousands of jobs at Scunthorpe and prevented a “serious impact” on UK industry, including Network Rail, which buys steel for the railways from the plant.
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Shutting the plant would also have ended Britain’s “primary” steel-making ability because blast furnaces allow steel to be made from scratch, rather than relying on scrap metal.While the NAO’s report highlighted the benefits of the intervention, it warned about the high cost of the rescue package, which had reached £377m by the end of January this year, including £15m spent on advisers.
The bill could soar beyond £1.5bn if operating costs continue at their rate of £1.3m a day, it said.
That’s just the cost of keeping that apprently vital primary steel making capacity.
Might well not be worth it.
“rather than relying on scrap metal.”
Are we to be against recycling now?
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We’re also in favour of subsidising fossil fuels. Quick, tell the IMF to uprate their estimates.
JC on a crutch, for the 422nd time, blast furnaces do not produce steel – they produce raw pig iron, which is then further processed to steel. And they do not make ‘steel from scratch’, they make pig iron from iron ore and limestone, which have to be dug up from somewhere, transported to the blast furnace at vast labour and cost, and then turned into pig iron at a further vast cost in energy and other resources, and also generating vast quantities of waste by-products.
Making new steel by recycling old steel is so much more efficient of energy and resources that it’s why everybody with half a brain does it that way these days. Making virgin pig iron only begins to make some sort of sense in places with local supplies of high-grade iron ore and quality limestone where transport and energy costs are low, and Scunthorpe is about as far away from being such a place as it is possible to imagine. Some estimates suggest that for the near-term future, the world is close to being self-sufficient in steel based solely on recycling it – it is the ultimate recyclable material, we generally use less of it for a given application than we used to, and the supply, although variable, appears endless.
Another article by a liberal-arts graduate who does not begin the understand the first thing about the subject. The Gell-Mann effect made flesh.
llater,
llamas
The Chinese still seem to be buying a lot of Aussie iron ore.
Though I understand they’ve made huge investments in Guinea to drive our prices down.
When I read these screeds I have to remind myself that not everybody went to school in Sheffield like me and was taught the fuindamental basics of steel-making as part of the curriculum. At Primary School, even!
I’m now wondering about how I know about Bessemer converters. Thinking back it was probably a school visit to the Science Museum.
And he’s buried at West Norwood cemetery – along with Maxim, Doulton and Tate. All from a short walkthrough last week.
But is it? I confess total ignorance of this matter. What’s the net cost to the taxpayer and what non-pecuniary benefits rise from the expense?
I must confess that I have begun to suffer from State Spaffing Fatigue and now can’t get incensed about things which cost less than £1 billion a year.
A billion here, a billion there, pretty soon you’re talking about real money 🙂
prevented a “serious impact” on UK industry, including Network Rail
We need to pump subsidies into an inefficient loss-making business because otherwise a different inefficient loss-making business that we pump subsidies into could take a hit.
I came here to say there’s plenty of steel for rails if we do Beeching II and melt down about 70% of the tracks.
Beeching didn’t do Beeching I: it was Harold Wilson.
Well ok. But Beeching is the Emmanuel Goldstein to trainspotters. I love starting with “but Beeching was right” to these people.
I believe that Beeching is worshipped by many cyclists for all the cycle routes that replaced the scrapped railway lines.
It pre-dates Beeching but there’s a lovely route from the west of Swindon to Marlborough on the old Midland and Southwest Junction line. It does have some hilly bits on it, but they’re not that steep.
Loads of garden iron railings (and other iron ware) were dumped at sea in WWII after the press driven madness of crowds created a mountain of useless metal. If it didn’t rust away it should be fairly easy to find. Any use?
A load of it in the Thames estuary if I recall
There’s quite a few tons of German steel in Scapa Flow…….(pre-nuclear too; apparently all steel made since 1945 is different due to Fat Man and Little Boy).
An uncle served in the RN in the war in subs. After demob he got a job as an electrical engineer. There was a shortage of heavy duty electric motors so he was sent to some place in Hertfordshire which had been a wartime scrap depot see if he could find some that were serviceable. He said there were acres stacked house high with garden & park fencing been taken down & away for wartime production needs. As he said – “probably along with my bloody front fence they robbed”. So that’s possibly where it ended up..
Close the unprofitable lines, really privatise the rest, and use the rails for scrap.
Put them all up for conditions fee privatisation and scrap those not taken up.
Just because they can’t be run profitably under government licence conditions it doesn’t mean some entrepreneur can’t find a profitable business plan.
A lot of it would be a stretch for anyone.
Trains are really expensive to run in terms of the static costs of vehicles, tracks, signalling. You need huge scale to make it work.
Cars, buses and coaches are what most places need.
If really privatized the Government would be able to impose lots of very expensive new regulations to ensure the passengers safety and limit revenue …… to levels below those needed to maintain the system.
I know it’s not a popular view round here, and it’s at odds in some ways with my own views in other areas, but I think we should keep our steel-making going.
You never know when steel is going to come in handy, and you might not want it by ship in a market with lots of other people bidding up the cost.
We could more than meet the cost of keeping this sort of facility going by refusing benefits including housing, healthcare and education, such as it is, to all non-citizens and any able-bodied indigenous idlers under the pension age.
These payments and subsidies are, to me, inarguably a much bigger waste of money.
@ Interested – I think you are mistaken when you say that your view is not popular round here. It’s a good point, and I think many here might agree to some extent that there’s value in maintaining this capability for strategic and geopolitical reasons. That is, after all, why the Chinese do it, in part at least.
What folks here seem to be reacting to more is the fatuous reasons that the political class are wibbling on about for doing this – it’s for jobs, it’s for the railways, it’s for the proud industrial heritage of Scunthorpe. When, in fact, as various others have noted, it’s primarily a combination of vote-buying and strong-arming a foreign company to keep operating one out-of-date and inefficient industry in order to prop up another out-of-date and inefficient industry. Interesting to note also how, as various others have noted, all of their pious platitudes about recycling, ‘alternative’ energy and reducing the use of raw materials and the production of waste products, all simply evaporate when there’s votes and graft to be harvested.
llater,
llamas
There are at least three mosques in Scunthorpe. Just sayin’.
Based on my one visit, they can keep it.
llamas, I was talking about our host – I think Tim is probably against it on grounds of principle.
I say ‘probably’ because he leaves the obvious lacuna of ‘it might be worth it’ when he says it ‘might well not be worth it’.
I’m pretty sure he – and certainly I – understand that they’re lying about the surrounding circumstances or motivations.
Tim is all for the state doing things like defence that are needed but not something private industry could step up too. Of course he might point out a better use of the money would be to import a big stock pile of pig iron to provide the same level of insurance as that furnace. The stockpile would be very less vulnerable too.
What else would you protect? Food? Clothing? Various electronics that get used domestically and militarily? Do we keep a stock of rubber for various reasons?
Er, I used to…
Pervert.
Norman, “rubbers” don’t count!
No I would offshore everything and just hope.
The problem is it’s difficult to see when this “just in case” approach is actually useful. The timeline for building new ships or tanks is far too long unless the world gets embroiled in a war that lasts for years. But in that scenario how are we getting the iron ore here in the first place, if we can’t get steel? And if we are so strategically dependent on a single steel plant in a wartime situation then it’s at real risk of having missiles or drones thrown at it.
Those are fair points – the nature of modern warfare, particularly asymmetric warfare), has probably changed everything (I’ve made the same point on here many times, in respect of drones).
But it’s not just about all-out war, and I’m not saying we should protect steelmaking, come what may, just so we can build destroyers – I’m saying it would be better to do that, in some way, than to spunk hundreds of billions of benefits and other state spending every year.
I do understand that you could make the same argument about importing socks, or paper, but I do think there is a class of things which are important enough that some level of home production is worth maintaining, somehow.
I can live without socks. I can’t live without steel.
Western Bloke above makes a sardonic attempt to draw up a list – as though protecting the food supply, insofar as we have one, is batshit crazy, when you live on an island in times like these, and I accept that there is a lot of thought needed, and further that governments are twats and shouldn’t be left in charge of anything.
I defer to Tim and some others on matters of really arcane economics, but I think quite a bit of it is highly theoretical, and was developed at a time when Britain was close to the hegemon; in the actual 2026 world in which we live, not all of those laws of economics make absolute sense to me (while admitting that deviation from them creates mirror trade-offs elsewhere).
Forget steel. What about oil and gas? Just as we could make steel but have decided to import it instead, we have oil and gas, we have effectively decided not to extract it and mostly import it instead.
A lot of jobs (yes yes ‘jobs are a cost’) and revenue goes the other way.
I know that this is being done because we are led by cunts following an insane ideology, and is not in that sense comparable, but the basis structure of the thing is the same: we import it when we don’t have to.
.
So we need steel to make military aircraft? Do you need rubber for the tyres too?
Our world has global supply chains for all sorts of products and if you assume someone blockades the country you have to think of a shadow supply chain for everything that would be the basics during such a period.
And is this actually something on the horizon? Who is threatening Britain?
Iran. 58% of the aviation kerosene used here comes from Kuwait. Air cargo fees go up; prices of all sorts of things go up; some become unaffordable and all sorts of behavioural and structural changes happen.
It would be nice if we had our own refinery using our own oil, which we had, once.
Other than shooting at bases with US planes, how is Iran threatening us? As of a couple of weeks ago, that kerosene was flowing until Trump attacked Iran.
As you know, the threat is right here right now. All the wibbling about Russia and China (not really an official enemy and owning most of parliament anyway) is just a distraction. Nobody wants to take the hard decisions to fund defence or deal with Islam in our country, so worrying about steel is a distraction too.
And Scunthorpe? It’s as nice as it sounds and the steel workers should be saved from their jobs, not subsidised indefinitely. Perhaps put to work on the Gainsborough oil and gas wells. Which would be there if someone wasn’t dodging another hard decision, possibly at China’s behest.
So we need lots of steel to deal with the problem of letting low grade immigrants into the country? I’m talking about who wants to drop bombs on London, send ships to Dover. That’s what you need steel for.
I assume there’s some steel in military aircraft, though I further assume that it’s mostly carbon fibre, and aluminium.
There’s definitely steel in bombs, as well as guidance systems and explosives, but we don’t need to make any of that here either because those nice Chinese will definitely just sell it to us if we need it, and anyway the world is totally safe and peaceful and always will be, probably.
The point I’m making is that there is a lot more besides steel. Do the aircraft need electronic components and how large a reserve do you need to store?
You’d have to do a whole, serious, constantly updated wartime plan.
I understand your point – it’s simple enough.
But you seem to be attempting the gotcha of getting me to admit that we cannot turn the entire country into one huge stores/factory making everything we need, all of the time, in the belief that this destroys my point about steel (as one example), and my replies are by way of saying, yes, I know that (about the stores/factory), because I’m not an imbecile, and that is why I am not suggesting it.
In turn, I assume that you are not an imbecile, but I have used a similar style of argument to put the question to you: what should we not offshore? You seem to believe in an all or nothing position, after all.
You reply to Norman’s point about the sudden drop in kerosene availability by saying
But this is an absurd reply.
What does it matter who started what?
The point is, it started, and now we’re in the shit because we didn’t maintain our oil and gas industries to the point where it wouldn’t have mattered anything like as much to us.
It is one of many things which are started, often unpredictably or for no good reason, and the prudent thing is to plan, without getting to the point that you wreck the rest of the economy for it, for a day when shit happens that causes serious problems.
Level of shit x likelihood = how prepared it’s worth being.
At the same time as all of the above, you are ignoring the other side of my point, which is that we already waste far more money in much more egregious ways and that we might (in the admittedly abstract world in which we are having this discussion) at least repurpose some of that to do some of this.
“But you seem to be attempting the gotcha of getting me to admit that we cannot turn the entire country into one huge stores/factory making everything we need, all of the time, in the belief that this destroys my point about steel (as one example), and my replies are by way of saying, yes, I know that (about the stores/factory), because I’m not an imbecile, and that is why I am not suggesting it.”
I’m not trying to create a gotcha. If you’re going to make bombers and you need rubber for tyres, having a load of steel and not having the rubber makes the steel useless.
You have to consider a wartime economy plan in totality. At the point that France and Ireland and Norway get together and surround us, how are we going to deal with it? What’s the cost of planning for it.
“But this is an absurd reply.
What does it matter who started what?”
I’m just recounting what happened. But that is the trigger. Trump bombed Iran, and so Iran has closed the Straits of Hormuz. And why did Trump need to do it? Iran are a bunch of cunts, but are they blowing up parts of Florida? Killing people on the streets of San Francisco? No. So why get involved?
All the talk about needing to defend ourselves from Russia is because we are arming Ukraine. If you’re Putin, he would like that to stop. If we weren’t involved in Ukraine, why would he care about Britain? What’s the cui bono of being hostile to Britain?
“The point is, it started, and now we’re in the shit because we didn’t maintain our oil and gas industries to the point where it wouldn’t have mattered anything like as much to us.”
Well, I’m not opposed to maintaining our old and gas industries as it’s a profitable thing to do.
“It is one of many things which are started, often unpredictably or for no good reason, and the prudent thing is to plan, without getting to the point that you wreck the rest of the economy for it, for a day when shit happens that causes serious problems.
Level of shit x likelihood = how prepared it’s worth being.”
And 5 years ago, where was the likelihood of a US president going to war with Iran? Or even 3 months ago? The 30% rise in the price of oil in a matter of days tells you not very likely. And markets are far better at risk management than government is.
“At the same time as all of the above, you are ignoring the other side of my point, which is that we already waste far more money in much more egregious ways and that we might (in the admittedly abstract world in which we are having this discussion) at least repurpose some of that to do some of this.”
How does pissing money away on other things have any bearing on whether we should piss money away on this thing? I’d like to not have an army of benefit scroungers, not have HS2, not have mickey mouse degrees AND not run a load of pointless manufacturing for some vague future possibility. Should we double the opera subsidy because that’s still less than steel making?
I don’t understand why the military of some (many? most?) countries have been so slow-witted on the subject of drones. My son-in-law let me fly his years ago. My first reaction was “This is wonderful.” My second was “Good, now I can bomb such-and-such street.”
That’s the point. Nobody has mentioned what the price of the benefits of spaffing billions of public money on Scunthorpe is. Nobody can make a calculation because nobody is prepared to provide the information on the otehr size of the equation.
How many thousand? Even if it’s 10,000 (which it won’t be; they’d have said), that’s £150,000 per job.
That’s pissing money up against a Red Wall to buy votes.
Quite a lot of war related stuff requires primary steel. And if you want to reduce the subsidies, scrapping the Green taxes will work fine 🙂
I agree that some specialty weapons and munitions are better-easier made from virgin steel, usually because of the specialty alloys required. But just as 90% of warfighting is not shooting, but logistics, 90% of the steel required to fight a war is boring, commodity-grade stuff, to build bridges and trucks and presses and cranes and hammers and shovels and all the other 1,000,001 things needed to put a soldier behind a rifle and facing the enemy. And even then modern induction furnaces and real-time metallurgy can produce plenty-enough of the specialty steels from scrap if they are really needed. The position that specialty steels require virgin steel to make is a peacetime efficiency argument, not a wartime expediency argument. In WW2, everyone – especially the Russians – figured out that the habit of specifying the best-quality steels and other metals for weapons designed for a long life in peacetime service is actually counter-productive in wartime. I’m no great fan of Lindbergh, but he did teach the USAAC the valuable lesson that there’s no point in operating your aircraft within parameters designed for 1,500 hours of service life in peacetime when the average life of an airframe in combat was 150 hours. Let the pilots drive the engines to 120% rated boost and burn the Allisons out in 200 hours if it means they win the dogfight today. Same goes for many specifications for super-duper steels.
llater,
llamas
£1.5billion. How much is that per job?
Ironman wants rid of the ironmen. Irony.
My wife thinks I’m constructed straight from pig iron. Or is that she just thinks I’m a pig?
It’s not a business; it’s a hobby.
UK is no longer a good place to make steel. Everybody knows it.
Continuing on a theme, because I’m from Sheffield, this is just sort-of background knowledge.
Sheffield started by importing steel, and manufacturing it into goods. There was some local production, but not much. The invention of Huntsman and Bessemer furnaces allowed the production of high quality steel, the already existing steel-to-product manufacturing industry, and local coal fields converted Sheffield into a steel *production* centre. Now, Sheffield is going back to being a steel *processing* industry, returning to its roots of importing raw steel and turning it into useful stuff.
I often point out that Sheffield makes more steel by value than it has ever done. The bulk quantity has gone down, the number of men needed to operate the machinery has gone down, but the value has rocketed. We made about 3.5 million tons in the 1960s, we make about 1 million tons now. So even by raw bulk “Sheffield doesn’t make steel any more” is a lie. But those 1 million tons are specialist steels, not the bulk raw stuff of the ’60s. In 2000 prices Sheffield’s steel output in value has gone from about £0.5bn to about £3bn. If you want surgical instruments or nuclear casings, you go to Sheffield.
500 years ago Sheffield did not need to make steel as long as trade routes existed. Today, the UK does not need to make steel as long as trade routes exist. Converting steel into products is where the money is, not digging rocks out of the ground or converting rocks into lumps of metal.
Yep. Stamping lawn mower decks and blades.
is the key point. Smith and Ricardo were writing at a time when the Royal Navy fucked up anyone who tried to disrupt trade. We are no longer in that world, sad to say.
As we’re currently seeing, 7th century madmen with Tandy drones can exert a disproportionate influence on world trade now.
Yeah. Drill baby, drill!!!!