Steel Crisis: Tata Buyout Consortium 'confidence' Over Help

[mikey4444]

For Tonyav, and others :::

http://www.bbc.co.uk/news/uk-wales-36099750

Lets hope this is some light at the end of a very dark tunnel.

[EDDIE51]

One main reason British made steel can never compete on the world market is that we have none of the raw materials in the UK, Iron Ore, Coking Coal and Limestone (for flux.) All of these have to be 100% imported. The main energy source is gas which is bought ( imported again) at a competitive price. Electricity is a relatively minor cost in conventional steel production. Only around 9% of the total cost. However if we change to making steel from scrap then electric furnaces have to be used and the electricity cost will be a far higher % of the total.
I have said many times that basic steel making is a low tech and 'dirty' industry, we should leave that to India and China and concentrate on importing raw steel as cheaply as possible and then converting it to the high spec, high cost products we need.
If anyone wants to 'sabotage our industry', all they need do is to refuse to sell us or increase the price of, the raw materials.

[mikey4444]

Eddie.....no limestone or coal in Britain ? Are you serious ?

[EDDIE51]

There is coal, deep underground, but it is not 'coking coal' and most of the limestone is in locations such as National Parks and 'Areas of Outstanding Natural Beauty' where permission to quarry it would never be given.
The coal has to be imported from Australia where even with transport costs it is over 5 times cheaper than the cost would be of reopening the UK's few deep mines to extract coal that is still less suitable for the steel making process than imported coal.
I agree with your views on British Coal and British Steel but in the cold light of economics it is simply a non starter.
The current proposals are just a 'face saver' for the government in my opinion. I would expect them to be discounted / downgraded or even dropped as soon as the Local council elections and the EU referendum are out of the way.

[mikey4444]

Eddie...I hope what you said in your last paragraph isn't true. We will have to hold the Governments feet to the fire on this issue of steel. It looks promising at the moment, but its still early days yet.

[mushroom25]

//most of the limestone is in locations such as National Parks and 'Areas of Outstanding Natural Beauty' where permission to quarry it would never be given. //

true enough, but there are still extant quarries outside these areas that produce sufficient limestone - and of the right type - for the UK's steel industry. Port Talbot's limestone comes from Batt Combe in Somerset, and the Hardendale quarry in Cumbria produces limestone for Scunthorpe and other smaller sites.

[EDDIE51]

Unfortunately, I am pretty sure it is true. In the cold hard light of finance there is no possibility of it ever coming near a profit in the foreseeable future.
Any solution other than closing it and importing steel will only paper over the cracks for a few years until the losses become too much to sustain.
I wish I could see a way to think otherwise but I just can't.
Leaving the EU would be certain to shut it as the EU puts an import tariff on Steel imports from outside the Union.