Britain may have to source raw materials from Japan in order to keep its last steelworks open. That’s the situation after an extraordinary intervention by the UK Government over the weekend. The last remaining blast furnaces in the country were kept alive after the plant at Scunthorpe was effectively nationalised when its Chinese owners threatened imminent closure.
To keep blast furnaces hot at Britain’s last virgin steelworks, the UK is contemplating importing iron ore via ports as far away as Japan. The scramble for supplies is all down to a sudden turn of events over the weekend. The UK Parliament was recalled from recess to sit on Saturday (12 April) – a course of action so serious it has not been invoked since the Falklands War of 1982.
Shipments to Immingham
Britain’s steel industry has been in decline for decades. However, with the closure last year of the massive works at Port Talbot in South Wales, the national infrastructure was reduced to a single pair of blast furnaces at Scunthorpe – an ageing steel plant on the east coast of England. That plant is in the hands of Jingye, a Chinese corporation widely reported to be in the pocket of the Chinese Government. The plant confusingly trades under the name “British Steel”.
The Chinese owners have complained that the plant is losing money. They claim a liability of GB£700,000 per day. Matters came to a head last week when Jingye announced that the plant was likely to close in a matter of days. They covertly took steps to divert and sell on incoming shipments of iron ore and coking coal bound for the nearby port of Immingham, where dedicated bulk cargo handling facilities exist.
Virgin steel for ships, tanks, rails
Blast furnaces are required to remain hot throughout their working life, or they can be permanently damaged. Although steel can be manufactured from scrap in environmentally friendlier electric arc furnaces, the quality of virgin steel is required for strategically important manufacturing – such as war ship hulls and rail tracks – of which Scunthorpe is the only domestic source.
Faced with a crisis which would leave the UK as the only G7 economic group country unable to produce virgin steel, the UK Government called an emergency session and passed legislation to effectively nationalise the works. Although several ministers have rolled back on the ‘nationalisation’ narrative, the UK Government has already installed its own senior management and begun scouting the globe for supplies.
Australia to Japan to Scunthorpe
Luckily, there are already raw materials shipments in the nearby port of Immingham. According to media reports in the UK, coking coal and iron ore is alongside and being unloaded for transfer by road to the steel works, twenty miles inland. A review of Ship2Port data shows at least three vessels alongside at the Immingham Bulk Terminal. In a previous nationalisation (also under the trading name of British Steel) a dedicated bulk handling terminal was built at Immingham.
It is also understood that a further shipment of coking coal from Austrailia, which had been diverted away from Immingham by the Chinese owners, has been turned around and is heading back to the UK port. Unconfirmed reports suggest that Jingye had attempted to sell on the shipment of coking coal and that it was bound for a Japanese port until the UK Government intervened and enforced an existing contract.
Cautious welcome from unions
The trades union, TSSA, which is mainly active in the transport and travel sectors, has welcomed the government action to keep furnaces running at Scunthorpe. However, the union is calling for the plant to be brought into public ownership as soon as possible. “Steel as a core industry central to the railways and across many other sectors [must not be] at the mercy of private or overseas interests,” said their statement.
“The actions of the Labour government to take control of the business at Scunthorpe and now making sure raw materials will keep the furnaces operating are welcome,” said Maryam Eslamdoust, TSSA General Secretary.“Steel is a core industry and vital to Britain’s railways, [it] must not be at the mercy of private or overseas interests. Ministers should now be clear that bringing our steel capacity into public ownership is the only viable way forward.”
Further Chinese ownership controversy
The UK does not mine coal – a result of a long-standing environmental policy. Nor does the UK have mined reserves of iron ore. Therefore the future of Scunthorpe depends on imported raw materials. To that end, Government sources have been quoted as seeking to “get ready a steady pipeline of materials to keep the fire burning”.
The move to take control of the Scunthorpe steelworks has been hugely controversial. While welcomed for the potential reprieve of over 2,500 skilled jobs at the plant, elected representatives from Scotland have fiercely criticised the corresponding lack of action to save the Grangemouth Oil Refinery on the River Forth, which is also partly Chinese owned, and scheduled for closure in a few months, in its 101st year of operation. It is the only oil refinery in Scotland, which lost its last steelworks (Ravenscraig) in 1992.