It’s an interesting time for the UK’s metal industry, and turbulence in the realm of steel manufacturers may still trickle down to those running a metal recycling plant, according to some experts.
For background, UK steel manufacturer British Steel, which counts providing over 90 per cent of all steel for the UK’s railway infrastructure as part of its business, entered administration last week amongst financial difficulties.
Politicians across all main parties have leant their support to British Steel in a bid to protect jobs and keep steel manufacturing in the UK, with the likes of Labour leader Jeremy Corbyn suggesting that it should be subsiding by the public, or be nationalised, if a buyer can’t be found, according to the BBC.
However, at present, the UK still remains a part of the European Union, which has specific state-aid policies which may prevent that happening. However, many are acting under the impression that the UK will soon have exited the European Union, and therefore will be less constrained by these regulations in the near future.
At present, there are plenty of buyers lined up however, with over 80 reported to have registered an interest, of which over 60 have been sent non-disclosure contracts so that they can access to the key, but sensitive, information needed to launch a bid.
In order to give further support to British Steel, even Network Rail have rallied behind, improving their order and offering upfront payment to help with any cashflow issues. British Steel has been allowed to continue operating in administration, while a buyer is sought, but under the supervision of three court appointed managers. Their statement explained its reasoning for standing behind British Steel as a key supplier despite its financial troubles: “British Steel is a major supplier to Network Rail, providing around 100,000 tonnes of rail a year and playing a major part in our plans to maintain, renew and upgrade the railway. We are confident that we remain able to carry out critical work on the railway in the coming months and beyond.”
So what does this mean for the British metal recycling industry? Well, according to the British Metals Recycling Association (BMRA), it could cause havoc and also cause more steel manufacturers in the UK to close, according to Materials Recycling World.
It’s believed that 5,000 jobs are at risk if British Steel closes, however, this could translate to as many as 20,000 in the wider supply chain. For context, it’s estimated that currently 15,000 are employed in the UK’s scrap metal industry, according to Recycle Metals.
A BMRA spokesperson issued a statement on the potential woes for the metal supply chain, including metal recyclers, but also other steel manufacturers: ‘The news about British Steel is naturally concerning, not least because of the impact on recyclers who supply the firm, but also because of the risk to so many jobs up and down the supply chain.’
The importance of metal recycling in the steel industry also cannot be overlooked, especially in environmental terms. Using recycled steel to make new steel equates to an air pollution reduction of 86 per cent, while also reducing water use by 40 per cent and water pollution by 76 per cent. It’s value to the economy is also important, even in an economical landscape where steel production and demand is shrinking, as export markets grow for recycled metals. In fact, with much more metal scrap generated than domestically is required, it’s believed that as much as 90 per cent was exported overseas last year.
In spite of so much of recycled metal going overseas, last year there was a huge push towards a ‘closed loop’ cycle, which was believed could save the ailing steel industry. The Greensteel campaign, also reported on by Materials Recycling World, The concept was to make the most of the UK’s burgeoning materials technology industries.
Predicting scrap steel to rise to 20 million tonnes a year in the near future, the scheme involved focussing on a greater percentage of steel recycling to be done in the UK, rather than being exported. The BMRA backed the plan, explaining that the UK was so efficient at the recycling process, that it produced far more than is needed for domestic use. As part of the scheme, it was suggested, the government could mandate the use of ‘locally produced materials with high levels of recycled content’, especially for government projects. Otherwise, the consumption for recycled steel would not increase, and scrap metal would need to be continually exported.
“Despite the UK already exporting more than 80 per cent of its ferrous scrap arisings, we remain hopeful that a solution will be found for British Steel, and [that] the fate of Tata Steel’s European operations becomes clear,” said the BMRA spokesperson.
Tata Steel is another contentious issue in the industry at present, with the collapse of a potential merger with Thyssenkrupp to help its European ventures, which currently have a debt of €2.5 million, according to Bloomberg. The European Commission looked to block the merger in an investigation that started last October, under concerns that it would reduce the competition in high-end steel supply. They would only permit it to go ahead with significant sales of assets, something that both companies would not agree to as it undermined the core proposal of the merger. The Indian steel giant now faces uncertainty for its European arm, but is still seeking a buyer.
British Steel was bought from Tata Steel by Greybull in 2016, for the price of £1, meaning that the company assumed a lot of liabilities as well as valuable assets. Workers took at three per cent pay cut to help the plant stay open at the time,. Greybull at first seemed to turn around the business, with big orders from the likes of the new Anfield Liverpool FC stadium and Crossrail, but with the Brexit vote came weakened Sterling affecting raw material prices and uncertainty over whether export customers would face tariffs putting off potential purchasers.
