British Steel intends to switch to EAF production

British steel producer British Steel British is preparing to switch from steel production in blast furnaces to more environmentally friendly electric arc furnaces (EAF). This could result in around 2,000 job losses at the Scunthorpe plant, writes The Guardian.

The UK government has offered China’s Jingye Group, owner of British Steel, £300m in aid to support the transition to EAF, but talks are ongoing. According to available reports, the allocation of funds is linked to the preservation of jobs and investment by the Jingye Group of £1 billion. It is not yet known how the cuts may affect the government’s position.

The potential cuts being prepared by owner British Steel are due, among other things, to a fight against losses – believed to be £30m a month. This step is still under consideration, the final decision on restructuring has yet to be made.

The British government recently agreed a £500m support package for Tata Steel to finance the switch to electric arc production at its Port Talbot plant.

According to a statement from the UK Department of Business and Trade, the government continues to work closely with industry, including British Steel, to ensure a sustainable and competitive future for the UK steel industry.

“While decarbonisation is a major challenge for our business, we are committed to transforming British Steel into a green and sustainable company, providing long-term, skilled and well-paid careers for thousands of employees and many others in our supply chains. As part of our journey to net zero, it is appropriate to evaluate various operational scenarios that will help us achieve our ambitious goals, and we continue to evaluate possible options,» said a British Steel representative.

The country’s steel industry, notes The Guardian, is one of the most difficult to decarbonize due to its energy intensity and the use of coking coal in pig iron smelting. The sector is suffering from rising costs and competition from cheaper products made in China and elsewhere.

Steel industry in Great Britain, writes S&P Global, citing government data, accounts for 2.7% of the country’s emissions. More than 80% of steel is produced using blast furnaces at Tata Steel’s Port Talbot and British Steel’s Scunthorpe plants.

As GMK Center repoted earlier, in February 2023 British Steel announced its intention to close the coke batteries at the Scunthorpe plant. Jingye Group said the move was partly to overcome global economic challenges. In addition, in 2022 additional costs due to increased electricity prices and carbon credits amounted to £190 million. It was said that the closure of coke batteries could take place by the end of 2023.