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Jobs at stake in the steel industry.

 

In the hazy gloom of a cavernous building at Tata Steel's Port Talbot complex in south Wales, streams of molten iron come hissing out of one of the site's two blast furnaces. The scene, which has been at the heart of the steel making process for decades, is now threatened as the industry looks to lower carbon emissions. Tata Steel UK, a subsidiary of the Indian conglomerate that owns Port Talbot, and China's Jingye, the owner of British Steel, the UK's second-largest producer at Scunthorpe in Lincolnshire, are both in talks with the government over financial support. They have warned that without taxpayer help, they could be forced to close their operations, leaving the UK as the only large economy without primary, or virgin, steel production.


The companies operating Britain's last four blast furnaces together want help to cover the vast cost of shifting from traditional steelmaking to greener alternatives. Analysts have estimated it would cost about £2bn to decarbonise Port Talbot alone. Jingye has also asked for aid to help with the jump in energy and carbon prices. More than 4,000 jobs are at stake at Port Talbot and another 4,000 at British Steel, most at Scunthorpe, with thousands more at risk in the supply chain.


"It's not only about the decarbonisation of steel," said Rajesh Nair, chief operating officer at Tata Steel UK. "The steel sector is the UK's biggest industrial emitter of carbon dioxide. The government's independent advisory group's climate change committee has said it needs to be "near zero" emissions by 2035 if the government is to meet its 2050 net zero pledge. "If they say no and the blast furnaces close, the UK will be the only modern economy without its steelmaking," he said. Critics of direct intervention point out that Tata Steel UK posted a pre-tax profit of £82mn from 12 months to the end of March.


TV Narendran, Tata Steel's chief executive, said time was short of making the business sustainable given high energy prices. To help Port Talbot to shift to alternative technologies would "require significant investment and policy support from the government", he said. British Steel declined to comment beyond confirming that it was in talks with the government to "overcome the global challenges we currently face". The government said it recognised "the critical role the steel industry plays in all areas of the UK economy", adding that its support for its low-carbon transition included access to more than £1bn to help with energy efficiency, low carbon infrastructure and research and development.


Although Tata has invested in energy efficiency measures at Port Talbot, neither the Indian group nor China's Jingye has yet publicly committed to a particular decarbonisation path. Options include:

  • Capturing emissions from existing operations.
  • Using electric arc furnaces.
  • Using hydrogen or natural gas instead of coal to extract iron from iron ore.

Steel produced in electric arc furnaces, used by some smaller producers, cannot be used for some essential applications. DRI is compatible with both blast and electric arc furnaces.

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