The long-term fate of the British Steel plant in Scunthorpe and its thousands of workers now rests on a new government steel strategy, which Business Secretary Peter Kyle is expected to publish in December. Kyle has already signalled its main thrust: a transition to electric arc furnaces (EAFs).
The minister confirmed he is “keen to see that transition happen” and believes EAFs will be part of the plant’s future. This would be a radical shift for the site, which has been in state-controlled limbo since April, when its Chinese owner, Jingye Steel, threatened to close it.
The December strategy will need to provide answers to several critical questions. Firstly, how will the government pay for the expensive new EAFs, given that “hundreds of millions” from the £2.5bn steel fund have already been spent on operational bailouts?
Secondly, what is the plan for the “thousands of people” employed at the blast furnaces that the EAFs will replace? Unions are demanding a “just transition,” fearing a repeat of the 2,500 job cuts seen at Port Talbot.
Finally, the strategy must address the loss of “primary steelmaking” capability. The government had pledged to save this, and unions are insisting it be maintained. A potential, but financially questionable, hydrogen-based solution is being considered, and the December report will likely be its first major test.