Business Secretary Peter Kyle is making a significant personal and political bet on electric arc furnaces (EAFs) as the future of British Steel. Stating he is “keen to see that transition happen” and that he “do[es]” believe EAFs will be built, Kyle is pinning his new steel strategy on the clean technology.
This represents a “clear future vision,” as the industry lobby group UK Steel noted. It’s a decisive move to end the uncertainty that has plagued the Scunthorpe plant, which has been in state-controlled limbo since its Chinese owner threatened closure in April.
However, Kyle’s enthusiasm is not universally shared. His bet is a high-stakes gamble that brushes against two major risks. The first is human: the EAFs will “raise doubts about the fate of blast furnaces that employ thousands of people,” with the Port Talbot job-loss precedent looming large.
The second risk is strategic. The plan abandons the government’s previous pledge to preserve “primary steelmaking,” a capability unions are insisting must be “maintained.” This forces Kyle to consider a “financially dubious” hydrogen (DRI) add-on to keep the promise.
With the £2.5bn steel fund already depleted by “hundreds of millions” in bailouts, Kyle is pushing a costly vision. His December strategy will reveal if his confidence is well-founded or if his EAF bet is a gamble the UK, and its steelworkers, cannot afford.
