Business Secretary Peter Kyle is projecting a “clear future vision” for UK steel, but this optimism is colliding with the “financially dubious” reality of the technology needed to achieve it. The minister’s backing for electric arc furnaces (EAFs) at Scunthorpe has opened a Pandora’s box of conflicting, costly demands.
The “clear vision,” praised by industry group UK Steel, is to move the state-controlled plant to “cleaner” EAFs, securing its future and meeting net-zero targets. Kyle stated confidently, “I do,” when asked if EAFs would be built.
However, this vision immediately runs into two problems. First, unions fear mass job cuts, as seen at Port Talbot. Second, EAFs melt scrap, which would break a 2024 government pledge to save “primary steelmaking” (from iron ore).
The only solution to this second problem is to build a separate plant to make Direct Reduced Iron (DRI) using green hydrogen. But this is the “financially dubious” part. Industry sources are skeptical it can be done affordably.
This leaves Kyle in a bind. His “clear vision” is only clear if he ignores the jobs and the pledge. To keep the pledge, he must fund a high-tech “dubious” project with a £2.5bn steel fund that has already been “drawn down” by “hundreds of millions” in bailouts. The vision and the reality do not add up.