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The Guardian
7 days ago
- Business
- The Guardian
Why a new zero-carbon UK steel plant offers hope and a headache
The ironworks in Saudi Arabia's coastal city of Dammam has had an unusual journey: it has crossed the Atlantic Ocean – twice. It was moved to Saudi Arabia in 2006 from Alabama, US. Before that, the plant's home was in the UK. The plant can produce about 1m tonnes a year of direct reduced iron (DRI), a material that can be used in green steel production. Decades after the plant left the UK – shipped in 28,000 pieces – British ministers are now considering reversing course and funding a similar facility once again. However, the government's DRI ambition is controversial within the British steel sector; the lobby group UK Steel told the Guardian that a DRI plant was not its priority. Senior industry insiders said they were concerned that hundreds of millions of pounds of taxpayer money may be spent on funding a 'white elephant'. The government last month recalled parliament to pass emergency legislation to take control of British Steel's two blast furnaces at Scunthorpe, amid concerns its Chinese owner, Jingye, was days away from closing it. The business secretary, Jonathan Reynolds, and the industry minister Sarah Jones said the effective takeover was necessary to preserve the UK's ability to produce 'virgin' or primary steel from iron ore. The Scunthorpe blast furnaces, known as Queen Anne and Queen Bess, are the last two operating in the UK. However, despite receiving materials supplies for several months, they are running out of time, and ministers are hoping to find a way of retaining primary steelmaking abilities. Blast furnaces use the carbon in coal to strip oxygen from iron ore. That process eventually results in carbon dioxide being vented into the atmosphere, where it heats the globe. Many steel companies are switching to much-cleaner electric arc furnaces, which use electricity to melt down scrap steel. However, they cannot produce iron from iron ore. That is where DRI could come in. The process strips out the ore's oxygen using gas. While the vast majority of DRI uses methane, resulting in carbon dioxide being released into the atmosphere, switching to using green hydrogen could allow iron production without significant emissions. Ministers have repeatedly cited DRI as a strong contender to receive part of a £2.5bn fund for a new steel strategy. Reynolds last month told parliament: 'Direct reduced iron technology is of significant potential interest to us for the future.' Yet, within the industry the idea is seen as a lower priority than reducing energy costs and preventing a flood of metal imports diverted to avoid Donald Trump's tariffs, according to lobby group UK Steel and several industry executives. Several executives and industry experts have raised significant doubts over whether a new UK DRI plant, costing up to £2bn to build, would provide good value for money. The owners of the two biggest steelworks, Tata Steel at Port Talbot, Wales, and British Steel at Scunthorpe, are not thought to be interested in sourcing the huge DRI supplies that would justify a plant. Other, smaller producers such as Celsa in Cardiff and Liberty Steel at Rotherham could use DRI, but do not need to. UK Steel said it would be better to focus on reducing sky-high energy costs at existing plants to match rates in France and Germany than on subsidising an expensive new facility. As the Saudi plant's trajectory shows, DRI plants have tended, like much heavy industry, to cluster in countries with abundant, cheap energy. The UK has some of the highest industrial energy prices in the world. 'The UK steel industry is in crisis, facing uncompetitive market conditions, shrinking demand, and global trade pressures,' UK Steel said. 'While the steel strategy is an opportunity to formulate a long-term vision for the sector, the government must also assess how its finite resources are best allocated at this point in time. Addressing urgent issues like electricity prices and trade defence must clearly take priority in order to put our sector on a sustainable footing.' The trade body said that efforts to assess how to meet future demand for steel would include assessing the need for – and viability of – a UK DRI plant, adding: 'Energy costs and access to affordable hydrogen will underpin this assessment, balanced against investing in new capabilities, energy efficiency, and productivity improvements.' Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion UK Steel said there would be an 'opportunity cost' to spending on DRI, while still remaining reliant on imports for iron ore. The government's steel council, which brings together ministers, unions and businesses, discussed DRI in detail during the British Steel crisis, to the frustration of some in industry. 'It'll just become a white elephant,' said one senior figure in the industry. New DRI plants usually only employ about 200 people. However, union leaders and many MPs believe that virgin steel is crucial either for making weapons in case of war, or for economic resilience in crises such as pandemics. Saudi Arabia is the only member of the G20 group of developed economies that does not have blast furnaces to make iron for steel production. But its two DRI plants mean it could theoretically, at a pinch, keep producing iron and therefore steel. Alasdair McDiarmid, the assistant general secretary at Community, a union representing UK steelworkers, said there was a strong case for DRI investment. 'Investment in DRI can make our steel greener and more competitive, while maintaining the UK's primary steelmaking capability, which is so crucial in our volatile world,' he said. 'DRI is fully compatible with electric arc furnaces and would make them more sustainable by delivering a secure, homegrown supply of metallics, and allowing for the future adoption of hydrogen-based steelmaking.' The UK government is awaiting a report on DRI by the Materials Processing Institute, a Middlesbrough-based research organisation, which is expected to recommend DRI as necessary to maintain primary steelmaking. Ministers will have to weigh up whether to heavily subsidise a plant to attract a private-sector investor. 'People see it as a bit of a red herring,' said one industry leader. 'Stop going on about this DRI stuff. If you've got limited resources, you would probably do something else.'
The Guardian
22-05-2025
- Business
- The Guardian
Ministers said to be considering bill to wipe out British Steel's debts
Ministers are reportedly considering legislation to relieve British Steel of debts, which have risen to nearly £1bn, as the government considers how best to prepare the Scunthorpe steelworks for sale. The government took control of the business last month after it said that its Chinese owner, Jingye Steel, planned to close the plant within days. The effective takeover required emergency legislation passed in a historic recall of parliament. Jingye remains the legal owner of British Steel, despite the takeover, and is owed money by the company. Those debts would probably have been wiped out in a liquidation. However, the Labour government prevented that from happening, fearing as many as 2,700 job cuts and the symbolic loss of the ability to produce steel from iron ore in Britain. British Steel owed £711m to Jingye businesses at the end of December 2023, according to its last filed accounts. However, net debt has risen to just under £1bn in the year and a half since then, government and industry sources told the Financial Times. The government is considering ways to wipe out that debt, including new legislation, the FT reported. Legislation to wipe out debts would be highly controversial, as it would effectively destroy a privately held asset. It could make foreign investors more wary of investing in the UK. A debt-free British Steel would be a much more attractive prospect for a possible buyer for Scunthorpe, where two blast furnaces are operating. It is thought that the government would provide hundreds of millions of pounds for investment in a new electric arc furnace to produce much cleaner steel. That would secure Scunthorpe's longer-term future. The industry minister Sarah Jones on Tuesday said the government had so far provided £94m to British Steel for working capital needed to buy raw materials and pay salaries. Jingye bought British Steel in early 2020, after Boris Johnson's Conservative government bore the cost of running the company for several months during the search for a buyer. The previous owner Greybull Capital, an investment firm, walked away. However, the Jingye takeover, completed in March 2020, came just as the Covid pandemic began to disrupt global supply chains. The Scunthorpe plant was losing about £700,000 a day when Jingye announced plans to close it. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion The government had offered Jingye £500m in state aid to make the switch to electric arc furnaces, but the company, whose other steel facilities are all in China, asked for significantly more. The switch would also be financially risky for any buyer. Liberty Steel, the operator of the UK's biggest existing electric arc furnace in Rotherham, is in talks with creditors as it faces a winding up petition. Liberty, which is owned by the metal magnate Sanjeev Gupta, has not produced any steel for nine months. Liberty and the rest of the UK steel industry have long argued that British wholesale energy costs are too high to be competitive with rivals in France and Germany, let alone in China. British Steel and the UK Department of Business and Trade declined to comment. Jingye was approached for comment.
Asia Times
22-05-2025
- Business
- Asia Times
High and rising political price of China's UK investments
One major consequence of the UK government's resistance to rejoining the European single market is that it is forced to go around the world seeking trade deals and investment. Recently, the government has boasted of successful arrangements with India and the US and of some new agreements with the EU. But it has also found itself courting one highly dubious suitor. Since the Chancellor of the Exchequer, Rachel Reeves, went to Beijing in January 2025, the government has been focusing much of its attention on China. And while investment from the world's second-largest economy is fairly unproblematic in a few sectors (some services and domestic real estate, for example), other areas are a cause for concern. Relying on Chinese money to support key sectors such as steel, telecommunications, advanced electronics, power and transport – all vital for Britain's economic and geopolitical security – is potentially dangerous. Yet it has been going on for years. Efforts to secure funding by a previous Conservative government even allowed state-owned Chinese companies to invest in the UK's nuclear future, despite considerable criticism from the likes of MI5 and the British military. Then there was the 2017 acquisition by a Chinese state-backed private equity firm of the cutting-edge semiconductor company, Imagination Technologies. Subsequent concerns over the leaking of its intellectual property prompted a parliamentary enquiry into foreign corporate asset-stripping. British Steel was also a target. Sold in 2019, it is now owned by a private company, Jingye, which in April 2025 moved to shut down operations at its Scunthorpe site by not supplying the raw materials required for its blast furnaces. In response, the UK government took emergency control of production in a scramble to stop the furnaces from going cold. That incident should have served as an urgent reminder to the government that it needs to be wary of the effect Chinese companies can have on the UK. Early signs, however, are not reassuring. Business secretary Jonathan Reynolds commented that Jingye was not acting in the 'rational way' he would expect of a company in a market economy. But the government should know that when it comes to strategic decision-making, Chinese companies do not operate in ways that others consider rational. Put simply, they are not comparable to their equivalents in Britain or other liberal-market economies – because they are effectively controlled by the Chinese Communist Party (CCP). According to the CCP's data, by 2017, it had established a formal presence inside 92% of larger private companies and 73% of all private companies in China. Those figures will certainly be higher now. And, as with the digital-technology firm Huawei, senior CCP members are often on a company's boards of directors. According to the CCP's data, by 2017 it had established a formal presence inside 92% of larger private companies and 73% of all private companies in China. So, while Jingye almost eliminated British Steel as a viable company, it can be reasonably assumed that a decision of such strategic and geopolitical importance would not have been taken by Jingye's executives alone. They would have been 'guided' by the CCP. And, of course, it's not just steel production that the UK should be concerned about. Chinese ownership now extends across many vital sectors. There's the Chinese state-owned company Beijing Construction Engineering helping to build a new science and innovation park next to Manchester Airport. And the private Hong Kong company CK Infrastructure, which owns water companies serving northeast England, Essex and Suffolk. China Investment Corporation (state-owned) owns part of Heathrow, while China Huaneng (state-owned) operates Europe's largest battery storage facility in Wiltshire. Meanwhile, wind turbine producer Mingyang (privately owned and reputedly linked to the Chinese military) is the preferred bidder for a new Scottish wind farm, despite being barred from a similar Norwegian development. All of these companies, irrespective of formal ownership, are likely to be subject to varying degrees of CCP influence and control (comment on the issue from Chinese companies is rare). And successive UK governments have either failed to appreciate the implications of this, or have accepted it as the price of gaining greater access to the Chinese market, especially for London's financial sector. This was almost certainly a factor behind China's involvement in the building of Hinkley Point's new nuclear power station, and was at the forefront in Rachel Reeves's discussions with the Chinese government earlier this year. Separately, Chinese investment in non-strategic sectors is much less controversial. One private conglomerate (Fosun) owns the Premier League side Wolverhampton Wanderers and formerly owned Thomas Cook. But the lesson from the British Steel fiasco is clear. We are now in a world where the political interests of major states trump the economic interests of their business corporations. Geopolitics takes precedence over geoeconomics. Consequently, Chinese firms – regardless of ownership status – should be barred from industries vital to the UK's economic and political security. Anything less risks subordinating British interests to those of the Chinese Communist Party. Jeffrey Henderson is a professor emeritus of international development at the University of Bristol. This article is republished from The Conversation under a Creative Commons license. Read the original article.
Yahoo
15-05-2025
- Business
- Yahoo
Government ‘confident' it has supplies to keep British Steel blast furnaces lit
The Government is 'confident' it will secure the supply of materials needed to keep the blast furnaces burning at British Steel's Scunthorpe plant, Downing Street has said. No 10 insisted the plant would remain in use, as staff at the company and civil servants work to prevent the permanent shutdown of Britain's last steel-making plant. Officials are racing to ensure there are enough new materials – such as coking coal and iron ore – to keep the North Lincolnshire site running, after ministers passed an emergency law at the weekend to take control of the plant from Chinese owner Jingye. On Monday, the Prime Minister's official spokesman told reporters: 'We are now confident in securing the supply of materials needed. Obviously we will be working with the management to identify further raw materials needed to keep a steady pipeline, and to keep the furnaces burning. 'I'm not going to get ahead of what comes next, but we'll obviously now work on the issues of ownership.' He added there are two ships carrying materials docked at Immingham port, also in North Lincolnshire, with 'a third ship which is currently on route off the coast of Africa, which will be making its way to to the UK'. The spokesman added he was 'not aware' of any 'deliberate acts of sabotage' at the Scunthorpe steelworks, when asked about suggestions that officials from Jingye might have purposefully attempted to shut the blast furnaces down. He added: 'But as the Business Secretary (Jonathan Reynolds) and the industry minister (Sarah Jones) said over the weekend, the talks that we were engaging (in) with the Chinese owners became clear that they wanted to shut the blast furnaces. 'That wasn't an outcome that we wanted to see.' Union officials have said they are 'hopeful' that the materials required at the North Lincolnshire works will arrive within the next 48 hours. Andy Prendergast, national secretary at the GMB union told the PA news agency: 'Where we are at the moment is that we're confident that the deal being done with the raw materials, and the steps being taken will get there on time, and ultimately that has the potential to preserve the future for the plant. 'There still needs to be… a deal to be done for the future, whether that's our preference – which is nationalisation of what is a key national asset – or whether that's a genuine private investor who's willing to come in and put the money. 'I think for us the key thing is that we keep this plant going and keep virgin steel-making capacity in the UK.' Asked about an expected timeline for getting the material in, Mr Prendergast said: 'We're being told it's going to come in good time, so we're… hopeful that it's the next 48 hours but we haven't had confirmation of that.' Jingye, British Steel's Chinese owners, had stopped ordering raw materials and had begun selling off existing supplies, the Business Secretary Jonathan Reynolds has said, sparking concerns the plant could close within days. The company on Monday appointed interim executives amid efforts to secure its future. British Steel announced Allan Bell as interim chief executive officer and Lisa Coulson as interim chief commercial officer with immediate effect on Monday. The Government intervened on Saturday after emergency legislation was passed in Parliament. The Department for Business and Trade said overnight that officials, along with British Steel staff, will spend the coming hours working to bring nearby materials on to site as well as ensuring that staff continue to get paid. Roy Rickhuss, the general secretary of the Community trade union, which represents steelworkers, accused Jingye of 'working against the business'. He told the Today programme on BBC Radio 4: 'The Chinese owners Jingye unfortunately were seen to be working against the business, if that's fair to say, that they weren't ordering raw materials.' China has accused the UK of 'politicising' trade cooperation, and suggested its companies could be put off investing in Britain if they were not treated 'fairly'. At a weekly press conference in Beijing, Chinese foreign ministry spokesman Lin Jian said: 'We hope the British government treats Chinese enterprises investing and operating in the UK fairly and justly, protects their legitimate rights and interests, and avoids politicising and over-securitising economic and trade cooperation, so as not to affect the confidence of Chinese enterprises in investing and cooperating in the UK.' Meanwhile, the Chinese embassy has said they are following the developments over the Scunthorpe plant 'closely', and that it is an 'objective fact' that British steel firms have faced difficulties. An embassy spokesperson said late on Sunday night: 'We have urged the British side to act in accordance with the principles of fairness, impartiality and non-discrimination and to make sure the legitimate rights and interests of the Chinese company be protected. 'It is an objective fact that British steel companies have generally encountered difficulties in recent years. It is hoped that the British Government will actively seek negotiation with the relevant Chinese company to find a solution acceptable to all parties.' Dozens of businesses, including Tata and Rainham Steel, have rallied to help British Steel with offers of managerial support and raw materials following the Government's takeover.
Yahoo
09-05-2025
- Business
- Yahoo
Fact check: US trade deal and Indian air strikes
This roundup of claims has been compiled by Full Fact, the UK's largest fact-checking charity working to find, expose and counter the harms of bad information. Is the UK-US trade deal 'full and comprehensive'? On Thursday the UK and the United States announced a 'landmark economic deal' between the two countries – the first such agreement the US has reached on trade since President Donald Trump introduced wide-ranging tariffs on US imports. Ahead of the announcement, Mr Trump described the deal as 'full and comprehensive', and later told reporters when questioned on this point that the agreement was 'maxed out'. But in reality, the deal covers only a limited set of measures involving specific sectors. The UK Department for Business and Trade has confirmed to Full Fact that it does not constitute a fully-fledged free trade agreement (such as that agreed between the UK and India earlier this week). The agreement includes a reduction in tariffs on UK car exports to the US, as well as the elimination of US tariffs on UK steel and aluminium exports, while the White House said the deal will 'significantly expand US market access in the UK', in particular for agricultural exports. A UK government press release said that 'work will continue on the remaining sectors – such as pharmaceuticals and remaining reciprocal tariffs', but added that the US had agreed to give the UK 'preferential treatment in any further tariffs imposed'. Neither party has confirmed when the measures agreed will take effect – at a press conference the Prime Minister Sir Keir Starmer said the tariff reductions would 'come into place as soon as possible'. Meanwhile, during Thursday's announcement US commerce secretary Howard Lutnick claimed that the UK government 'nationalised British steel' as part of the deal. Last month, the government passed emergency legislation to enable it to take control of British Steel's Scunthorpe plant to prevent its Chinese owners, Jingye, from allowing it to close. But British Steel was not nationalised, because the government did not take full ownership of the company. The government gained the ability to reinstate sacked staff and enter the plant to prevent the blast furnaces from being turned off, but ownership remains with Jingye for now. Ministers have indicated, however, that full nationalisation remains a possibility, especially if no other buyer is found. Finally, Donald Trump described the UK as the US's 'oldest ally, or just about'. That's highly debatable, as Mr Trump himself seemed to acknowledge when he then added that a 'couple of people claim that too, but let's put it right at the top'. Many, including Mr Trump himself previously, have argued that it is actually France which should be considered the US's oldest ally. Welcoming French president Emmanuel Macron to the White House in February, Mr Trump said: 'France is America's oldest ally. Our cherished partnership has been a force for freedom, prosperity and peace from the very beginning.' This is a reference to the French monarchy recognising the United States as an independent country in 1778, two years after the signing of the Declaration of Independence. France also provided critical support for the American colonies against the British in the American War of Independence. Others may point to Morocco, which was the first country to publicly recognise the United States of America with a decree in 1777. The UK officially recognised the US by signing the Treaty of Paris in 1783, after the end of the War of Independence – though the countries fought again in the War of 1812. Online misinformation about Indian air strikes Misleading social media posts have been shared widely online in the aftermath of Indian air strikes on Pakistan and Pakistan-administered Kashmir, amid escalating tensions in the region. A picture of a burning plane was shared on Facebook with a caption suggesting it showed a plane shot down by Pakistan. The country has said that it shot down five Indian fighter jets, including French-made Rafales, and a drone – a claim India has not confirmed. But a reverse image search reveals the picture shared in the post was used in a report by an Indian news site about a crash in September 2024, where an Indian Air Force MiG-29 fighter jet crashed in Barmer, Rajasthan, in the north west of the country. A video featuring a series of explosions at night was shared with captions saying: '#BREAKING: Pakistan Army confirms attack by India. India has launched an attack on Pakistan.' But this clip has been online since at least October 13 2023. It was described then as depicting Israeli air strikes on Gaza, although Full Fact has not been able to independently verify what the footage shows. And striking images of buildings illuminated by fire were also shared on Facebook with a caption suggesting that they showed India carrying out strikes in Sialkot, in Pakistan. India has said it targeted two camps in Sialkot, but both images are several years old, and featured in news reports about Israeli air strikes in Gaza in May and June of 2021. Misleading information can spread quickly during breaking news events, especially during periods of crisis and conflict. Before sharing content that you see online, it is important to consider whether it comes from a trustworthy and verifiable source. We have written guides explaining key tools to help you spot misleading images and videos.
