Britain's steel industry set to enjoy £3.8bn boost under Government plan
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- 15 Dec 2020
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Britain’s steel industry could boost its revenues by £3.8bn a year by 2030 according to a Government report setting out opportunities to bolster the sector and increase domestic demand for steel.
The report, part of the Industrial Strategy, said that in 2015 national demand for steel was 9.4m tonnes, of which less than half - 4.4m tonnes, worth £1.6bn - came from UK producers.
UK demand is set to rise to 11m tonnes a year by 2030 according to the Future Capacities and Capabilities study, and by boosting the amount of British-made steel used here, annual sales of UK steel could rise to £5.4bn.
The biggest opportunity to boost sales is through construction, accounting for £2.2bn, as Britain ramps up infrastructure projects. An estimated 3m tonnes of steel will be needed by 2021 for flagship projects such as the Hinkley Point nuclear power station and the HS2 rail link.
The car industry is another key target. Currently British car makers use 2m tonnes of steel a year, of which only 35pc is domestic.
By meeting new demand for steel in the UK and taking a bigger slice of the current 5m tonnes of imports a year, Britain’s steel making industry could be significantly boosted, the report said.
Claire Perry, Industry Minister, said: “Government has been clear that we will do everything we can to support our steel industry. The report identifies high-value opportunities for the sector worth nearly £4bn and the steel pipeline shows our commitment to using UK steel for infrastructure projects.
“We want UK companies big and small to be strong competitors for government contracts.”
Key challenges to boosting the steel industry included making sure Britain has the capacity and capability to meet demand. This could come through bringing back into commission mothballed plants or building new ones, and investing in new technologies and R&D so the latest types of steel can be produced.
Other issues identified as needing to be addressed include the higher energy, tax and logistics costs faced by UK producers.
To help steel makers bid competitively for future contracts the Government has also updated its pipeline of projects. This sets out £600bn worth of planned work ranging from roads and rail to defence and nuclear.
Referring to the crisis in the sector two years ago that cost thousands of jobs, industry body UK Steel welcomed the report, calling it a “crucial milestone on the road away from the difficulties of recent years towards a more positive, sustainable future for the steel sector”.
Gareth Stace, UK Steel director, added: “This report shows once and for all that there can be a positive future here for our steel producers, if the right measures are put in place.
“The Government’s steel pipeline, at over 4m tonnes, shows the scale of its influence as a major consumer. We urge it to continue working with the industry to identify and implement the solutions necessary to help us deliver a bright future for UK steel.”
Roy Rickhuss, general secretary of steelworkers’ union Community, added: “The report will help us all better understand the opportunities and challenges facing the UK steel industry, and assist steel companies in planning and investing for the future.”
A fortnight ago G20 nations agreed a deal to tackle massive over-capacity in the global steel industry that was the root cause of the crisis in the UK sector two years ago. The accord signed at the G20 summit in Hamburg is intended to stop unfair subsidies that skew the steel market, and is the first concrete step in addressing massive steel production over-capacity and create a level playing field.
Last year a total of 1.6bn tonnes of steel were produced – half of it from Chinese mills. However, despite being responsible for 800m tonnes of steel a year, China is believed to have a further 300m to 400m tonnes of production capacity on top of this.
