Skip to content

Miliband’s Plan To Destroy The Steel Industry

September 26, 2021
tags:

By Paul Homewood

The idiot Miliband wants to throw more of your money down the drain.

image

Ed Miliband has unveiled Labour’s decade-long, £3bn to transform Britain’s steel industry.

The shadow business secretary said a future Labour government would revive British manufacturing by supporting it to decarbonise.

He pointed to similar plans unveiled by US president Joe Biden which are designed to future-proof heavy industry while meeting climate targets.

The former Labour leader made the comments at the party’s Brighton conference where shadow ministers are setting out a policy programme to take on Boris Johnson.

https://metro.co.uk/2021/09/26/labour-conference-ed-miliband-sets-out-3bn-plan-for-british-steel-15319838/

£3 billion? Mere bagatelle! Why stop there? What about £30 billion? Or £300 billion?

Miliband offers no details of how this will be spent, or how much steel companies will have to pay towards his green agenda.

But from my experience £3 billion won’t go very far, not when we have three major steelmakers to divide it between.

But let’s examine the options.

 

1) Electric Arc Furnaces

Most of our steel is produced via blast furnaces and BOS vessels. The former, of course, use coke to reduce the iron ore.

Many have suggested we use electric arc furnaces (EAF), which are currently used for small quantities of high quality steels, owing to the ability to control steel specifications.

However they have one major drawback – they use steel scrap, which has a finite supply.

There is of course a very good reason why steelmakers around the world have opted for the blast furnace route, and that is because it is by far the most efficient process.

Even if Miliband financed the switch to EAFs, steelmakers would see their production costs rise significantly.

On top of that, EAFs use electricity to melt the scrap. The Net Zero agenda will inevitably lead to much higher electricity prices, pushing up costs still further.

 

2) Direct Reduction

Instead of using a blast furnace, you can use this process to heat iron ore to around 1000C, thus reducing the ore to iron.

One slight problem though – the most common method is to use natural gas for the heat. Obviously in Miliband’s wonderful green future, natural gas will be a no-no!

That would inevitably mean hydrogen or syngas. But we know that green hydrogen is horribly expensive, so once again our steelmakers will simply not have an economically viable product to sell.

 

 

3) Integrated Steelworks

One major advantage of blast furnaces is that the coke ovens attached produce coal gas as a by-product. This gas is then recycled for use elsewhere in the steelworks, such as rolling mills.

To replace this essentially free energy with hydrogen or electricity would also add considerably to steelmakers’ operating costs.

When Miliband’s done, it’s unlikely we will have a steel industry left at all!

Miliband the Hypocrite

I cannot leave without touching on Miliband’s utter hypocrisy.

He rants about the Tories being responsible for the decline of the steel industry. But what about his own responsibility in bringing us the Climate Change Act, and its consequent effect on electricity prices, probably the biggest factor in the decline of steel.

In reality, the British steel industry was on its knees in the 1970s, overmanned, inefficient and lossmaking. By 1990, Margaret Thatcher had turned British Steel into arguably the most efficient steel company in the world, and making a decent profit to boot.

It was during Labour’s years in power when the rot set in.

32 Comments
  1. Graeme No.3 permalink
    September 26, 2021 10:40 pm

    Hydrogen will be his ‘solution’.
    In Australia a consortium (Sorry, the Australian Hydrogen Council) made up of banks (ANZ, NAB) Woodside Petroleum, Origin Energy, Wesfarmers and Fortescue Metals Group – are calling for $10bn in seed funding and a top-up of $1bn annually through to the end of this decade, to be allocated to business through grants and loans.

    My thought is Oink, Oink.

  2. Chaswarnertoo permalink
    September 26, 2021 10:40 pm

    Can’t we just lynch Millipede?

    • HotScot permalink
      September 26, 2021 10:51 pm

      Why waste the rope. No one ever took him seriously.

      • Phoenix44 permalink
        September 27, 2021 9:09 am

        Just to be pedantic, lynching isn’t hanging. It’s simply any extrajudicial killing.

      • Rowland P permalink
        September 27, 2021 11:35 am

        Rope is cheap and “sustainable” because it can be used again and again….

  3. John Smith permalink
    September 26, 2021 11:05 pm

    The Climate Change Act 2008 was the greatest single act of vandalism and destruction in the UK since the Luftwaffe

    • Phoenix44 permalink
      September 27, 2021 9:10 am

      No, Labour’s mass nationalisation after 1945 was far more destructive.

    • George Lawson permalink
      September 27, 2021 10:08 am

      …..and the Climate Change Committee that recommended it to the government have now been found to be lying in their statistical forecasts. How can they be allowed to get away with it?

    • Rowland P permalink
      September 27, 2021 11:37 am

      To quote the late Christopher Booker – “The Climate Change Act will go down as the longest economic suicide note in history”.

    • Cheshire Red permalink
      September 27, 2021 12:00 pm

      CC Act will take some topping.
      Fantasy science supported by ruinous finances driving ‘solutions’ that cause more problems than they solve.
      What could possibly go wrong?

  4. September 26, 2021 11:16 pm

    Ben Pile

  5. September 26, 2021 11:28 pm

    The only Twitter thread about the meeting
    is from a guy in Bloomsbury, not quite Islington but 300 yards away.
    The female MP involved is top of the Fabians, who are also based in Islington.

    Thread : https://www.twitter.com/RishiMadlani/status/1442169360827682822

  6. tom0mason permalink
    September 27, 2021 2:06 am

    Shirley Williams, Diane Abbott, Gordon Brown , Ed Balls, Andy Burnham, David Miliband, Ed Miliband and Tony Blair are the apologists face of the Fabians. They offer crony capitalism mixed with totalitarianism! The LSE is their university of re-education, pushing their nonsense of government public control, and cronyism, aka corporatism through all aspects of government controlled profit-making.
    The Fabians a most wicked group of evil people, people who have promoted euthanasia, abortion, the ‘mercy killing’ of those with physical and mental abnormality or deformities. Their doctrine is all about the elimination of ‘useless eaters’ and they offers no humanity, no compassion, no forgiveness, they do offer their very narrow pseudo-scientific leftist agenda — overall not that different from Orwell’s imagined society in the book ‘1984’.
    Fabians — snobbish upper middle class misanthropes, who believe they have the rite to determine the future of all fellow human beings they deem below them. Fabians are a cancer within the UK’s society.

    • StephenP permalink
      September 27, 2021 7:09 am

      I’m surprised that they don’t include themselves in the ranks of ‘useless eaters’, for all the benefit they have brought to society.

    • Cheshire Red permalink
      September 27, 2021 12:05 pm

      C’mon Tom, don’t sit on the fence. Tell us what you really think.

  7. cookers52 permalink
    September 27, 2021 5:22 am

    Quite confused by this as we haven’t got a steel industry any more just a few ageing relics.

  8. James Broadhurst permalink
    September 27, 2021 5:50 am

    Miliband’s tenure as energy and climate change secretary 2008-10 when he had the opportunity of ensuring wind and solar farms could never hold the grid to ransom (by removing their absolute right to have the grid take their generated power whenever they chose) but failed to do so. As I recall Miliband accepted the argument from his “advisers” that wind would always be blowing somewhere in the UK thus ensuring stable power generation. He and his predecessors cleared out any engineers in energy substituting them with a “just in time” philosophy of purchasing advice from think tanks. This was probably the last time any government then and now were to receive independent advice. Anyone who didn’t share the group think was ignored.

  9. Ben Vorlich permalink
    September 27, 2021 8:58 am

    There’s no such thing as future proofing. Any plans based on it are bound to fail. The future is full of unknown unknowns.

    I had a colleague at work who had a house built with network cabling to every room so he could connect all his computer controlled TV, washing machines, central heating and whatever. It cost a lot of cash extra. Now like everyone else Alexa does it using Wi-Fi. At the time he reckoned all houses would be built like his future proofed one.

    • Phoenix44 permalink
      September 27, 2021 9:18 am

      As Hayek pointed out in 1944 and again when winning the Nobel Prize in the 1970s. Central planning will always fail because we cannot know enough about the present, let alone the future. And the problem is intensifying – I thought iPods, Tom Toms, compact cameras and the original Blackberries with email were great, now I’ve got all of that on one gadget. You have to have the naive arrogance of a Milliband to think you can future proof anything.

  10. Lez permalink
    September 27, 2021 8:58 am

    Slightly OT, but some Monday morning schadenfreude to lift the spirits:
    https://www.telegraph.co.uk/money/consumer-affairs/invested-150000-inheritance-wind-farms-fear-gone-good/

  11. Harry Passfield permalink
    September 27, 2021 9:20 am

    When Miliband’s done, it’s unlikely we will have a steel industry left at all!

    Then he will gave achieved his objective for his masters. His success is our failure.

  12. Phoenix44 permalink
    September 27, 2021 9:24 am

    So Milliband’s genius plan is to first make industries uncompetitive by making their inputs expensive, then to make them competitive by subsidising them with taxpayers money. Because somehow the subsidy isn’t paid by consumers.

    Why do people on the Left struggle much with basic economics? Why do they believe that somehow shifting money around changes the amount of money and who actually has to pay it?

    There is NO DIFFERENCE between me paying more for what I consume and me paying more tax so that what I consume costs less. But the latter is worse because it removes choice. Which is why Left wing economics is always sub-optimal.

    • Rowland P permalink
      September 27, 2021 11:43 am

      “Taxing a country into prosperity is like standing in a bucket then trying to lift yourself by the handle”. Winston Churchill.

    • ThinkingScientist permalink
      September 27, 2021 4:17 pm

      Phoenix44 says: “There is NO DIFFERENCE between me paying more for what I consume and me paying more tax so that what I consume costs less. But the latter is worse because it removes choice.”

      Actually there is a difference and the latter is MUCH worse because of the inefficiency and cost of collecting the tax, administration costs and government overheads. Every pound in your pocket devalues by about 25p when the government takes it and spends it on your behalf.

  13. Nick Dekker permalink
    September 27, 2021 10:42 am

    So Britain should just import all the steel it needs. Get a grip.

  14. September 27, 2021 10:45 am

    So Britain should just import all the steel it needs. Or maybe not make anything that needs steel. Get a grip.

  15. Devoncamel permalink
    September 27, 2021 11:00 am

    Miliband is the perfect example of how useless most politicians are in the real world. He does however excel in virtue signalling.

  16. Dan permalink
    September 27, 2021 2:39 pm

    “There is of course a very good reason why steelmakers around the world have opted for the blast furnace route, and that is because it is by far the most efficient process.”

    Typically there are two drawbacks to eaf steelworks:
    1. Their product portfolio typically do not include high grade, high value flat products due to the impurities in the scrap. Nucor, the largest American steelmaker is primarily eaf and are making some inroads on this.
    2. They rely on expensive electricity so are popular when paired with large baseload electricity supplies such as hydro or nuclear.

    However they don’t require the expense of a coke ovens and a sinter planet and the gas network required. The workforce per ton is also much lower. Eaf steelworks are not capital intensive compared to bof works. However they are also short of gas, relying on natural gas. But there isn’t enough scrap to full the demand for steel and recycling rates are high.

    I cannot remember exactly how much scrap the UK exports but it is equivalent to the total production in the UK i.e. millions of tons.

    The problem for UK steelmakers is their coke ovens. There are 5 licences available: Redcar (I think licence still exists two at Scunthorpe and two at Port Talbot). The remaining batteries are at or near end of life and replacement facilities will cost in the region of £1 billion+. Blast furnace 4 replacement in 2012 cost £200 million capital + lost production. The life extension projects on other blast furnaces in Scunthorpe/Port Talbot cost between £30-60 million + production loss. I don’t see either owners having that cash available given the lack of profitability of the works.

    The problems for the still industry stem from the downsizing at the end of the 1970’s with which Thatcher had relatively little influence. The UK went from approx 21 integrated or semi integrated works to ravenscraig, Redcar, Scunthorpe, port Talbot and llanwern (mills remaining at Corby, shotton and other smaller mills) (bsc didn’t return to profitability until 1988). It remained a reasonably good actor until 2009/2010.

    The reorganization didn’t go far enough and indeed ravenscraig, Llanwern and Redcar closed totally or mostly in the intervening years. Not only that but while Port Talbot was recieving Europe’s news Bos plant, shotton was getting the newest mill. Other plans like a third BF and another mill (probably pickle and oil) at Port Talbot didn’t progress.

    What we have left is razor edge margins. Arguably Scunthorpe should have gone already and Port Talbot survives due to their parent. I don’t see either parent company rebuilding facilities on a bof route and this will be required at some stage. Or replaced with different tech.

    • Jack Broughton permalink
      September 27, 2021 6:45 pm

      Thanks for the details. Should the UK have strategic steel-making or rely on imports from the low-cost producers?

      • Dan permalink
        September 28, 2021 11:35 am

        Can’t really comment on structural/sections market coming out of Scunthorpe. I know a little bit more for strip/flat products.

        If the UK doesn’t have its own steel industry producing flat products, then it will need very good trading links with high quality producers to keep its car industry in its current form or similar.

        8/10 approx of all cars produced in the UK get exported. The UK is a net importer of cars (2:1 I think) so one could argue that supply from abroad just increases albeit with economic shock.

        As for steel imports: it depends. Low cost steel could be slab or coil from North Africa, Russia and Turkey. You would still need finishing mills to process these imports but such rarely seen to be economic anywhere in the world. Often you see a heavy end closing with the mills being left behind, slowly declining.

  17. September 27, 2021 4:33 pm

    Strangling the steel producers…

    Europe’s steel industry rapidly running out of carbon budget
    September 14, 2021

    https://www.powerengineeringint.com/emissions-environment/europes-steel-industry-rapidly-running-out-of-carbon-budget/

  18. mjr permalink
    September 27, 2021 6:00 pm

    Don’t worry. .China will continue to produce all the steel we will ever need. And we can always trust them to have our best interests at heart can’t we?

Comments are closed.

%d bloggers like this: