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IThe warning is to “expect the snap, crackle and pop” as three glowing electrodes are dropped into an electric arc furnace in Cardiff. What follows sounds like thunder and lightning. It is a man-made storm in a huge ceramic-lined cup containing 140 tonnes of rapidly melting steel.
The plant, owned by Spain’s Celsa, melts scrap steel using high-voltage electric currents that generate the 1,600 degrees Celsius needed to turn the metal into liquid. The glowing steel is then ready to be shaped, twisted and crushed to form the bars used to reinforce concrete.
The plant’s 1 million tonnes of annual output has been used on projects ranging from buildings such as Wembley Stadium and the Shard, to infrastructure projects such as the Elizabeth Underground line and Hinkley Point nuclear power station.
The electric arc furnace is a sign of the future for the rest of UK industry.
Port Talbot-based Tata Steel and Scunthorpe-based British Steel plan to replace polluting blast furnaces with much greener electric technology. The plans will cut emissions but will also mean the loss of thousands of jobs, including 2,800 in south Wales.
Boosting investment
The new Labour government has promised to renegotiate a £500m subsidy agreed under the Conservative government for Indian-owned Tata Steel to make the switch and cut almost 2% of the UK’s carbon emissions.
Tata pulled the last iron from a blast furnace hours after voters handed Labour a landslide victory in this month’s general election, and plans to close its second furnace in September.
However, the UK’s new business secretary, Jonathan Reynolds, has offered more money in the hope of saving jobs. The Labour Party has pledged an extra £2.5bn of investment in the UK steel industry. A large portion is expected to go to Tata Steel, on top of the £500m already agreed.
However, there have long been questions about how the money will be spent, and Tata Steel insists it will not regret its decision to close the blast furnace.
The picture is gradually becoming clearer as the Labour Party and steelworkers’ unions converge on a plan aimed at securing new investment that they hope will save hundreds of steel jobs in south Wales.
According to Tata, the government is unlikely to offer subsidies to the polluting blast furnaces, which are losing £1m a day. But it is understood that new investments could include a new plate mill at Port Talbot to make shafts for wind turbines and a new facility to make the valuable galvanised steels used in cars and construction. One industry source said these operations together could provide 500 jobs.
Gareth Stace, chief executive of UK Steel, a lobby group, said he believed there was a “significant future opportunity within offshore wind for the UK steel sector” that would be ripe for investment.
“We want to be able to supply that steel,” he said. “To achieve this, we need investments.”
It is understood that the government and unions are unlikely to push for Tata Steel to invest in using hydrogen to produce lower carbon steel. So-called “direct reduced iron” (DRI) has long been mooted as an option to decarbonise the UK steel industry, but one industry source said DRI appeared not to be an option.
Three people with knowledge of the talks said there was no strong business case for Tata to build a DRI plant, because it would get most of its raw materials from scrap. Another big problem is the complete absence of industrial-scale “green” hydrogen produced with renewable electricity in the UK.
Reynolds also raised questions this week about “the size of new furnaces that could be installed” at Port Talbot. Tata has committed to building an electric arc furnace capable of producing 3.2 million tonnes of metal a year and wants to order the machinery before September.
Unions are believed to be pushing for talks to begin on building a second, smaller electric arc furnace, possibly at Llanwern. However, a source close to Tata suggested the company did not see enough demand to support such a move.
Talks were halted on 22 May after another union, Unite, threatened strike action. However, they resumed when that threat was lifted.
Roy Rickhuss, general secretary of Community, another union representing steelworkers, said Reynolds had been briefed on a draft memorandum of understanding drawn up between Tata and the unions that discussed possible options.
Rickhuss said the trade secretary had “acknowledged the investment commitments already secured, and indicated that these would form the basis of ongoing negotiations with Tata Steel”. But time is running out, he said. “We call on Tata to urgently engage in meaningful discussions with the government to unlock further investment and protect jobs.”
A Tata Steel spokesman pointed to previous comments, including those by the company’s global chief executive, Thachat Viswanath. Narendran, who was open to further investment but would need a compelling business case to proceed.
From coal to electricity
Whatever happens, it seems that Britain’s blast furnaces are on their way out (although China’s British Steel has yet to make a formal decision on when to close its two Scunthorpe furnaces).
Blast furnaces evolved over hundreds of years of steelmaking, but the basic method is similar to that pioneered in Britain during the Industrial Revolution.
The furnace uses coal combustion to extract oxygen from iron ore. The resulting molten iron is then processed to produce steel. However, much of the oxygen combines with the carbon in the coal to produce carbon dioxide, the main contributor to global warming.
Electric arc furnaces don’t need coal. Tata’s plan is to stop processing iron ore into metal and instead use scrap steel from demolished bridges, buildings and cars – anything usable – and melt it down again using electricity. The circular process promises huge carbon savings compared with blast furnaces.
Celsa, which employs 1,800 people in the UK, took over the Cardiff plant, formerly known as Allied Steel and Wire, in 2002. It installed the electric arc furnace in 2006.
The flames rising to the roof of the Cardiff arc furnace are a clear sign that the process is not carbon-free. However, Celsa said the emissions associated with its steel were 88% lower than those from a blast furnace. It has pledged to be carbon neutral by 2050 and says it will achieve this by using entirely renewable electricity, although it will have to rely on carbon offsets until it can use hydrogen and other technologies for functions beyond the arc furnace.
Sovereign security
The switch to electric arc furnaces does not address another problem highlighted by Labour and some in the defence industry: if the Port Talbot and Scunthorpe blast furnaces close, the UK will be left without a way to process iron ore into steel.
Chris McDonald, a former Tata Steel engineer, is one of the advocates for Britain to invest in a hydrogen DRI facility for the “sovereign security” of being able to make steel.
In 2014, McDonald moved from Tata’s former research division to the non-profit Materials Processing Institute, before being elected last week as Labour MP for Stockton North, where he will try to influence the new government.
The UK steel sector would probably only need one DRI plant, given the volume of scrap it handles, McDonald said. However, it is not clear which particular company would be willing to invest. McDonald suggested a plant could be built as a government-backed joint venture.
If blast furnace closures continue, the UK will be left as the only G20 country without the capacity to produce its own steel, as has happened with the Covid-19 pandemic and Russia’s invasion of Ukraine.
“I think it’s up to us to explain why we know more than the other 19,” McDonald said. “We want to make sure we can make steel no matter what happens in the world.”
