I’m a descendant of blast furnace men -my dad and his dad. I’ve been to blast furnaces, watched them tapped, seen the dangers and also the wonders of it all. And in the end my home town went from being one of America’s leading steel producers to the capital of its Rust Belt. And largely because of a lack of national government strategy for maintaining a critical national industry.
I’ve been following British Steel’s grinding demise and what I consider is a Chinese strategy. In many ways it parallels the demise of the steel maker my forbears worked for. Vacant a government strategy, it began to fail, was bought out by foreign steel makers with promises; and they cut it apart monetizing what they could and let the rest die: replacing the lost manufactured steel products with imports from the owner’s home nation mills.
Energy! The UK’s insane focus on renewables has in part caused electricity prices to be double those of the USA; the home of the Great Industrial Revolution - the United Kingdom - is in danger of manufacturing-industrial collapse because of energy.
My hometown sits on Marcellus Shale and fracking has made the region a net exporter of natgas these last ten years. And now foreign investors have built two new smaller steel plants because they are economic.
What about global warming? Net Zero and all that? I don’t know ultimate route to a cleaner future. But I’m certain it is not going to be renewables like wind-solar. I don’t want my country down the “forever drain” in the meantime and accelerated downward by the likes of China. America’s continuance is in Trump’s “Drill, Baby, Drill”!
My forebears came here from England into the Virginia Colony in 1660. I identify as British. I want Britain to succeed.
You are completely wrong: the reason energy prices are so high in the UK is that they’re pegged to the wholesale price of gas (the most expensive source required to meet a demand), not renewables. The LCOE price (including plant & distribution costs) for renewables is typically 1/2 to 2/3 that of gas, and that gap will only increase over time.
The Levelized Cost of Energy (LCOE) for renewable sources like solar or wind does not typically include the cost of providing energy when those sources aren't available — such as during cloudy days, nighttime, or calm wind conditions.
Which means you need to retain base load power capability - and that adds to the bill.
Nope: LCoE does include the availability/load factor for any given source, so that’s already factored in to the calculation, viz:
LCOE is essentially the average cost per unit of electricity generated over the lifetime of a plant. It includes:
• Capital costs (construction, financing)
• Operating and maintenance costs
• Fuel costs (where applicable)
• Decommissioning costs
• Capacity factor/load factor
I’m not arguing against some base load generation and supply diversity, but some lobby groups massively overstate its importance in today’s generation mix.
Capacity factor measures a power plant's actual output relative to its maximum potential output over time, focusing solely on that technology's performance. It doesn't account for costs, backup systems, or alternatives needed for reliability.
You can use system LCOE with reasonable estimates of social costs/externalities though.
100% Renewables + Storage:
Base System LCOE: $120-210/MWh (midpoint: $165/MWh).
Adjusted (with $185/tCO2): -$80 to $137/MWh (midpoint: $30/MWh).
Coal/Gas Grid:
Base System LCOE: $84-132/MWh (midpoint: $108/MWh).
Adjusted: $183-340/MWh (midpoint: $261.5/MWh).
Conclusion: Using the Nature study’s $185/tCO2, the renewable grid is dramatically cheaper when externalities are included, with a midpoint ~$231/MWh lower than fossil fuels. Even at the high end ($137/MWh), renewables undercut fossil fuels ($183/MWh minimum). The higher SCC amplifies the climate penalty for coal/gas, making renewables a clear winner.
Nowhere in the world is paying $185/tCO2, a figure dreamt up with no basis in real costing simply to produce a desired outcome. It is a putative tax, not a real one, let alone a resl cost.
"Nowhere in the world is paying $185/tCO2" - That isn't how negative externalities (social costs) work. They are paid, they just aren't paid by the polluter.
In the US, the latest estimates, released in 2023, by the Environmental Protection Agency (EPA) placed the central SCC at $190 per ton of CO2.
Of course it doesn't - it's not (and not meant to be) a generation/distribution modelling tool, but simply a rather assumptive and generic metric for lifecycle generation cost. Much as I'd like to see a bottom up model specific to each plant, this is what we currently have.
LCOE costs and not real world costs. You can study what we really pay by looking at the CFD data from the Low Carbon Contracts Company which show generator by generator what they generate and what strike price they received for their output. You can work out the costs of ROC subsidies using data from OFGEM, again generator by generator, or using summarised data from DESNZ. You can look at company accounts to see their revenues for generation and curtailment. All these sources demonstrate that LCOE is fiction.
The CfD strike price isn't what we pay, it's what the generator is guaranteed should they sell the power in the reference markets. What they get is based on what they sell it for. While the CfD is structured to guarantee that price the generators aren't selling their power in those markets (the volume in the markets hasn't substantially changed since 2012.) As such it's fair to assume they are selling it under PPA and in some way hedging their market/CfD Strike Price risk (probably some financial derivative instrument.)
Just for completeness: the CfD support isn't from the government it is from power suppliers to the LCCC; the budgets for the CfD (set through the levy control mechanism) have been under utilised, so much so that some allocation rounds (e.g. AR2) have had negative utilisation; the negative utilisation is payment back to the LCCC by CfD contract holders, those payments get redistributed to power suppliers; the reason payments are made back to the LCCC is because power prices are high, because of high gas prices; so extraordinarily, yes, low carbon generators have been subsidising gas fired electricity generation.
The CfD may well (eventually) be recognised to be possibly one of the worst policy instruments ever.
Have you looked at the price of gas ? Hint - it's been falling recently. Uk electricity prices are high because of green subsidies, the cost of expanding the grid for windmills, and carbon taxes.
Coal power (as in China), is the cheapest form of electricity generation.
What do I know? I guess I’m only a data scientist whose company works on the evidence-driven ramifications of accelerating climate change. Oh, and I’m an advisor on government R&D programmes, including energy systems and system modelling. So, apart from several decades experience in deriving actionable outcomes from understanding complex data…
Oh, so you're basically an environmental activist with an axe to grind. This is exactly why I want to split England in half - hysterical, deluded members of the quasi-intelligentsia can live in the south, and practical members of society can live in the North.
That is completely wrong. The true cost of renewables is much higher than the cost of gas or of electricity generated from gas. Just at the wholesale point of connection to the grid we have CFDs that pay an average of over £150/MWh, ROC subsidised renewables that enjoy subsidies averaging over £100/MWh on top of market prices, and feed in tariffs that average over £200/MWh. You can easily look these figures up from official sources. Then there is the opaque addition of REGO certificates that all renewables are entitled to that add £10-15/MWh to bills. These are real costs, not the imaginings of wet behind the ears analysts at Lazards who have never held a real energy industry job.
Then there are all the additional costs required to integrate renewables supply: the extra pylons and interconnectors and batteries and other equipment needed to maintain grid stability, and the substantial additional balancing costs including curtailment because renewables output is unreliable, as well as the costs of providing backup.
Gas ended the week at 83p/therm, or about £28/MWh on an NPB wholesale basis. You can make electricity for double the gas cost, to which you must add carbon taxation that depends on the mode of operation: as baseload it adds about £14/MWh. In inefficient ramping modes to match variable renewables output that can run to £20/MWh . So we have a gas generation cost including green tax of £70-75/MWh, well below the cost of renewables which are more than double the cost, plus extra for the integration costs.
I reviewed the residential electricity rates across 40 European nations.
The 12 largest industrialized economies have an average rate twice as high the average of the 50 U.S. states: $0.35 per kiliwatt-hour vs $0.17. The UK is the 4th highest of the 50.
The average EURO area is $0.29. France (at near all nuclear) is $0.28. Norway & Iceland (hydro & geothermal) at $0.18. 25 other nations (largely in the east and mostly relying on fossil fuels for electric power) is $0.19.
Getting verifiable comparative energy prices for China and India is difficult. But - there are suggestions that China’s comparative residential electricity rate is $0.10 and India at $0.07. Both are on the rise, but extremely competitive vs the developed world.
China has a 20 year natgas pipeline import agreement with Russia that is so large it’s worth near 2% of GDP to Russia. China is building ~100 coal-fired electricity plants a year, and has 24 nuclear plants under construction at the moment with 100 funded in the current 5-year budget. Yes, it is building a lot of wind-solar, but if you look at location, it’s niche applications. Fundamentally, China has been building its economy on fossil fuels, and is transitioning fir a cure of nuclear..
Not to argue or even wanting dialog, my personal opinion is that whatever the Western European continental nations (not the eastern continental nations) and the U.K. & Ireland are doing in energy sourcing, federal subsidies and national government regulation is producing the highest energy costs in the world. And the industrial - manufacturing sectors of those nations are faltering.
So too, over the past decade the combined GDP of the European Union members has been mostly flat. The GAP in annual GDP growth has widened nearly double relative to that of the USA. Moreover, export trade constitutes 50% of the EU’s GDP (doubling over the past two decades). The USA export component of USA GDP has been flat that same period at 10%.
My energy observation is the Western Europe including the UK is at risk due to over-reliance of export trade while high, high energy prices are making its industrial-manufacturing sector uncompetitive.
In the end, Trump’s primary concern is with the USA is energy costs; and with his tariffs threat policy is simply going to “Put America First” through exploitation of fossil fuels coupled with reducing corporate taxes, minimizing government regulation and just last week issued an Executive Action to fully expedite potential foreign investors’ applications into the USA to capitalize of cheap energy and low taxes - all for access to the USA’s $29 trillion GDP economy (vs the EU and China tied at 2nd place at $18 trillion GDP each).
To date, I have tabulated $750 billion of new investments from foreign manufacturers perhaps driven by Trump’s tariff threat and foreign investment inviting policies. They include new steel mills, auto manufacturers, electronic chip makers and a joint venture proposal being considered to participate in the drilling, fracking, pipeline transport, LNG facility and new west coast Alaska $50 billion natgas project in Alaska’s Arctic. The participating foreign investors would share in the export profits through favorable pricing of LNG they buy! All under negotiation, but again, Trump’s goal is to make America an unparalleled global industrial manufacturer.
I’m hoping the Western Europe looks internally at what is disabling its economy, and what can be done to reverse the trend. I think it’s energy prices followed by socialist-minded bureaucrats having no business sense.
A thought! Look at energy de-regulation. The State of Texas is fully energy deregulated. My son (in the general north central Dallas area) annually bids his electrical energy needs from ~18 alternative suppliers and his incoming transmission & distribution service to a ~8 others. He pays $0.15 per kilowatt-hour. Other states are beginning to follow suit.
Lastly, I intend no insults with these comments. I just worry for my “home country” - the U.K. The loss of basic steel making is another self-inflicted dagger in the UK’s economic heart.
The UK operates a subsidy scheme in which the price paid for renewables is adjusted to compensate the renewables supplier if market prices are below their contract price. The renewables supplier must refund the difference if market prices are above the contract price.
In almost every period, except for a brief period in 2021 when gas prices spiked, the prices paid for renewables has been higher than the market price.
Consumers pay higher prices for renewables and also pay for the extra costs of backup systems and grid balancing.
For in depth research about the true costs of renewables in the UK, follow David Turver here on Substack. He does the research and provides real data, not fictional LCOE data.
You're referring to the CfD scheme operated in the UK. It's original intent has been subverted by market players, to the point where it contributes significantly to the cost of energy in the UK, which would otherwise be falling, and Scotland (for instance) generated 113% of total national demand from renewables, yet Scottish consumers pay the highest energy prices in the UK.
But you're referencing a market pricing system, not the inherent life cycle cost of generation. So getting rather off the point of the comment thread.
I am referring to all the pricing for renewables. Maximum prices for CFDs were set by government, and actual prices are the result of auctions to build the capacity. There is no subversion by market players. Likewise the levels of subsidy in ROCs are determined by government, and likewise for FiTs. These prices and subsidies are set precisely with the aim of covering the life cycle costs of the generation, which fell initially but have stabilised or increased more recently: AR5 produced no bids at all for offshore wind and some AR4 capacity has been cancelled as uninvestible at the price tendered.
I do not think you understand what the inherent life cycle cost of generation is, because you exclude many of the inherent costs. Moreover, these costs increase as the penetration of renewables increases. The first few wind and solar farms make little difference to grid operation, but add more and local grid instability becomes an issue (in fact for tidal stream generation it has proved an issue for even the smallest projects, such as Bluemull Sound in the Shetlands which is prohibited a direct grid connection being forced to smooth output and incur round trip losses via its own grid battery, and ditto for the Orbital 2 project in the Orkneys). Add more, and transmission proves inadequate on windy/sunny days. Add more and you must curtail to maintain adequate grid inertia or risk blackouts. Add more, and you need to consider whether you can export to a neighbouring grid at a cost for the interconnector and a price for the output that makes economic sense. Add more, and you start to look at the economics of storage for highly variable and highly intermittent surpluses, or the alternative of simply curtailing output. All the while cost is added in providing flexible generation to ensure demand is met and available when there is no wind or sun.
Each addition adds a fresh layer of cost and increases the cost of the previous layer. It is you who is getting off the point by failing to understand the real world.
Renewable generation at times provides significantly in excess of the Scottish needs for sure but at other times they have to import so are they prepared to pay the higher price then. Probably not which is why we have an average price across the UK that treats everyone equally. Also majority of Scottish renewables currently comes off ROC supported windfarms and they are receiving a much higher price then the CfD sites are so not sure the price would be as low as people make out who too often use the marginal cost anyhow not the long run cost.
The greater the diversity of low-carbon generation and the greater the interconnectedness of grids, then the lower overall capacity needs to be to support ‘worst case’ scenarios. Connectivity is therefore effectively a generation multiplier. I was making the point about Scotland primarily as just one illustration of how completely screwed up the UK energy market model is.
What is for sure is the complete failure of OFGEM over nearly a decade to agree to grid expansion that the three transmission operators were asking for. The consequences of this are there for all to see in the high levels of constraints now imposed on Scottish wind when its urgh windy (you couldn't make it up!!). We also have the farce of Seagreen which theoretically should have one of the highest load factors having been constrained off more than it has generated. OFGEM have been cajoled by DENZ to get on with grid expansion now but much of that will just neutralise todays problem not deal with the future needs of the country.
Slightly redundant comment when we're referring to a blast furnace with basic oxygen furnace here, which uses relatively little electricity. The raw material and labour costs are the main distinguishing factors vs. other countries' production.
Not quite sure what your point is Will, as Scunthorpe Steelworks (British Steel) utilizes Basic Oxygen Furnaces (BOFs) as part of its steelmaking process. These BOFs are crucial in converting molten iron into steel, using oxygen to reduce the carbon content🤔
Hi Barry, apologies if not clear - my point was in relation to the long thread of discussion on the importance of electricity prices for Scunthorpe's competitiveness. I was saying that electricity prices are of limited importance because it is a BF-BOF, and will therefore use relatively little electricity from the grid.
In 1960’s and 70’s was an electrical technician at Scunthorpe Steelworks, initially employed at Redbourn Works, then moved on to the Anchor works. During my time there did visit Main Works (Appleby-Froddingham’s) BF’s Generator and Blower House. Energy was relatively cheap then, as UK’s Coal Mines were still in operation, and Steelworks had a number of coking plants, producing steam and coal gas as well with as steam and coal gas from BF’s used to drive steam turbines, generate electricity, as well steam and coal gas distributed to the Iron and various steel making processes. In 1970’s North Sea NGas introduced🤔
I appreciate your concern George but, in the 1960’s the last of the IRON ORE MINES closed. From then on all the following ARE IMPORTED:
IRON ORE
IRON ORE IN THE FORM OF SINTER
METALLURGICAL COAL/COKE
IRON PYRITES
CRUSHED LIME (Maybe sourced locally)
Virtually all of the above are shipped in to Immingham docks some 25 miles away, then unloaded, then loaded onto freight railway and taken to Scunthorpe Steelworks where it’s unloaded again.
Perhaps if Scunthorpe could go back to mining its inferior Iron Ore instead of importing higher quality, and the Greenies could turn a blind eye to use of British metallurgical coal/coke, they might just be profitable, though I very much doubt it, if the Labour Government yet again Nationalise it, it will continue to be a mill wheel around British Tax Payers necks, great maybe for Scunthorpe and it’s steelworkers, but not for the rest of British Tax Payers🤔
I think there’s rather a difference between “disagreeing with management’s strategy” and “allowing the last blast furnace in britain to be shut down”. The wording is a bit disingenuous as it makes it sound like they’re taking it over because the government disagreed with their pay or marketing or something when it’s more a question of preserving knowledge.
As well as knowledge, I’d just add, for what it’s worth, it seems to me it’s also skills, domestic production & dare I say it … community cohesion …
Yes, change & streamlining will b needed, yet down the line … & the Chinese Company looks like it’s been playing fast & loose with blast furnace operations … a potential agenda for ‘change’ … so I feel this is a v justifiable move by the Government in the circumstances of what looks like last resort …
There’s a lot of emotion in there Ed. If you visited Scunthorpe Steelworks you will have seen that the Steelworks lies on the North and East side of Scunthorpe, on travelling to Scunthorpe/Steelworks you’ll have noticed that it is ~25 miles from any town of any significance, that’s Hull, Grimsby, Lincoln, Doncaster. Scunthorpe is known as an Island Town for good reason its agricultural land between Scunthorpe and the towns I’ve mentioned. In simplistic terms the only reason Scunthorpe Steelworks is where it is, is because that’s where the Iron Ore was discovered. I know quite a lot about Scunthorpe’s steel making and social history. I worked there in the 1960 and 70’s predominantly at the Redbourn and Anchor steelworks sites.
My wife’s great grandfather was the manager for the Midland Ironstone Company one of the early Iron Ore mines, he was also the one of the amalgamators in creating Scunthorpe, as the main name in amalgamating of five smaller agricultural villages: Scunthorpe, Frodingham, Crosby, Brumby, and Ashby. This occurred primarily due to the growth of the iron and steel industries in the 19th century. The Iron Ore was initially transported to West Yorkshire for smelting, the smelting areas in West Yorkshire were surrounded by coal mines. As more Iron Ore mines opened up in the 19th century smelting started in Scunthorpe area, and so the town grew. Shortly after I joined what became British Steel in 1960’s the last Ore Mine Closed for the reasons you’ve given that of better quality and cheaper Iron Ore from abroad. From there on the Steelworks became less and less profitable. The rest is just history.
This from the wonderful University of Google👇
Since 1960, the Scunthorpe steelworks has had four distinct owners, including the government through the British Steel Corporation (BSC). Subsequently, it was owned by Corus, Tata Steel, Greybull Capital, and currently, Jingye Group.
Here's a more detailed timeline:
1967-1988: The British Steel Corporation (BSC) owned Scunthorpe, following nationalization in 1967.
1988-1999: Following privatization, the company became part of Corus.
1999-2007: Corus was acquired by Tata Steel.
2016-2020: Tata Steel's Long Products Europe business, including Scunthorpe, was purchased by Greybull Capital, which later put the company into liquidation.
2020-Present: The Chinese steelmaker Jingye Group acquired the Scunthorpe steelworks.
Perhaps if Scunthorpe could go back to mining its inferior Iron Ore instead of importing higher quality, and the Greenies could turn a blind eye to use of British metallurgical coal/coke, they might just be profitable, though I very much doubt it, if the Labour Government yet again Nationalise it it will continue to be a mill wheel around British Tax Payers necks, great maybe for Scunthorpe and it’s steelworkers, but not for the rest of British Tax Payers🤔
It amazes me how often national control of strategic industries brings out the predictable comments about the cost to the taxpayer yet one never hears similar about the gargantuan cost of propping up our bloated, corrupt finance sector.
Your comment Dave is a whataboutism, it provides no solution to the Scunthorpe Steelworks problem of not being profitable, and never will be because of the reasons I’ve given, it’s now geographically in the wrong place, if you’ve bothered to read what I’ve written. It’s become a political emotional issue simply because of Scunthorpe Town, a Town that without a steelworks is basically in the middle of nowhere🤔
The Chinese subsidise their steel industry, I see no good reason why we can't.
Scunthorpe is an issue precisely because the attitude adopted by people like you for so many decades has left the country with such little productive capacity in this area.
And again I note that the finance sector, which produces very little and yet costs the country vast amounts and has damaged so many actually productive sectors continues to get a pass.
“The Chinese subsidise their steel industry, I see no good reason why we can’t”
I can Dave, it sets a president for lame duck companies and industries to claim they are of strategic importance to UK’s security, so that they can claim they deserve handouts too. Just as you say about the financial sector, and which I wouldn’t argue against.
The Chinese system that we call ‘Communism’ separating it from the Russian model is defined by Xi Jinping as Socialism with Chinese characteristics. Xi Jinping promised the Chinese people common prosperity: more equal distribution of income but also saying not uniform egalitarianism, in general he’s kept to his word.
“Scunthorpe is an issue precisely because the attitude adopted by people like you for so many decades has left the country with such little productive capacity in this area.”
You know nothing about me Dave so👇
“When you resort to attacking the messenger and not the message, you have lost the debate — Addison Whithecomb 🤔
China is not a communist country. It is a market economy with a very strong state. It is one of the most unequal in the world in terms of wealth distribution.
I lived in China for three years I know exactly what the country is like. It's blown a massive credit and property bubble because it's a culture which is obsessed with money.
I can literally predict what you're going to say about a given topic because of the vocabulary that you use: straight out of the Daily Mail / Telegraph lexicon - "lame duck companies" "handouts" etc.
The whole reason why the British government has been forced to intervene is precisely because the private enterprise has failed.
So you can predict what I’m going to say Dave, hmm I wonder. You see Dave have grandson and granddaughter in-law in China, they’ve been there 11 years, trumps your 4. They started out in Shenzhen, moved to Shanghai (were there all through C19), then Beijing, been there now 4 years. They have a very nice maisonette with a garden, and an āyí and yuányì gōngrén, both have very good jobs, are Uni graduates, one, a degree in geology, and the other in military mechanisation, they both earn double what they could earn in UK with a fantastic lifestyle, and no they’re not Chinese, coming from Viking and Celtic stock, so true English. They’ve provided my wife and myself with two great-grandsons, both births requiring T sections. The first birthed in UK by NHS, second in Beijing, and they’ve told me the Chinese health and natal care are superior to NHS. Now Dave what do you want to tell me about China, though you appear to have a negative opinion🤔
A useful insight into what may be happening at Scunthorpe. I've just started reading Material World and will press on to get more background information.
I‘d agree that there is a lot to digest here and many questions remain unanswered, particularly by the obscure Chinese ownership. It certainly has something odd to it and reminds me of the Kremlin’s plan to dissolve Gazprom Germania through an intermediary to stir chaos on European gas markets shortly after the full-scale invasion.
Referring to your question in the article whether there is a precedent of an industrial facility being moved to China, yes, there is. In 2002, around 1,000 Chinese workers dismantled the then-ThyssenKrupp steel works in Dortmund, in the heart of the German “Kohlerevier”, transported it to China and rebuilt it step-by-step near Shanghai.
German media outlet Spiegel TV reported on it (sorry, article only in German)
Britain occupies a special place in the Communist party's "century of humiliation" narrative. Over many many decades they have inculcated in their population a seething resentment about events from almost 200 years ago and the story becomes ever more extreme with each generation. When I left my Chinese university students had to attend mandatory history lessons on "European aggression".
As always Scotland has been the petri-dish of this kind of national resource/economic orthodoxy argument. Ravenscraig Steelworks was closed in 1992 on the basis of cheaper steel being able to be imported. This devastated the area around it and ended primary steelmaking in Scotland. England benefitted from many steelworkers who moved to Corby or elsewhere in England where steelmaking continued. I agree with the taking over of Scunthorpe for strategic reasons however these reasons never cut through in the Thatcher/Major years and certainly not for Scottish based raw material production. Grangemouth refinery is the obvious case of one rule for England another for Scotland. Of course the UK argument will be used as defence but this is obviously specious and partisan.
I too visited a steelworks, mighty Ravenscraig, in the 1970s. Then they were sadly blown up much later. I also watched the blowing up of the Scottish coal power station at Cockenzie under the Tories. The industrial sabotage of Scotland under Tories and Labour continues now with the closing of Grangemouth refinery in the country that provided huge wealth to the rest of the U.K. through its oil. I will be pleased if Scunthorpe survives , of course it should, it’s an essential industry, but you can’t help but ask if it is partly because it’s in England. All our Scottish essential heavy industries are closed. Thank goodness the Scottish Govt did not privatise water. Always enjoy your reporting Ed.
There's no dividend in Scotland for not privatising water. They have no idea how many storm spills go into the rivers there. We might not like the numbers but at least it's clear now in the UK the size of the problem. Just wait until you see the numbers in Scotland before wishing for something different.
I read your article w great interest. I know literally nothing about the steel industry in any country, and I appreciated the way you laid out details from start to finish. It helped me understand what i happened to watch on the BBC this morning. Very good information.
in basic terms we (in England to start with---then the rest of the world) built an economic structure based entirely on the continued availability of cheap surplus energy extracted from coal oil and gas.
there are lots of ifs buts and maybes, lots of economic/political shenanigans involved over time, but basically that was how it all started, and is now the root of our problem.
there's no cheap energy left in any meaningful quantity, but we, humankind that is, are behaving as though there is.
i've written a book on it, explaining the history of how we got here, coming out in June
And most of the heavy equipment for mining was made at Coalbrookdale! The iron / steel industry was first built in the Black Country. I believe even the ventilation equipment used at some Scottish Mines was made there and transported up. It must have been quite a sight!
thanks---it was, i live just a couple of miles away from Coalbrookdale, and was weaned on the history of it all. which motivated me to write a book about it ---as a sort of tribute to my forebears.
Governments subsidizing steel making has been the norm worldwide rather than the exception. Trump said it some time ago as you cited it Ed “if you don make steel you don’t have a country”. Then steel is not just about P&L and short term economics, it’s about long term geopolitics and social resiliency too. Chinese and Indians know it well, in Europe too but we have been more elusive to tackle it. Steel is arguably the most naturally Circular bulk product we can produce in Europe (electric arc scrap based) with a decarbonisation potential - including DRI - well established. CBAM should help curb the economics in Europe against Asian makers, but as you describe in your MW book, quality is key (the story of the Chinese premier and the ball-pen). Quality in a circular economy model is 360, is pure System Doing (not just thinking). When energy rather than material is the bottleneck, “we’re right” (remember E=mc2), although we all know that we need materials to harvest and transform this primary energy, a lot of them indeed. I’m not a steel maker myself, but I don’t see any other alternative to deeper diving in circular very low C steel making, not to shut down the whole industry. We can’t shut down industries in Europe, we need to revamp them with better oiko-nomics.
Partial parallels with what happened to MG Rover but in that case some of the manufacturing equipment was shipped back to China. I guess here it's just the customers who are being shipped out.
And a great and important post Ed. Thanks for putting the effort in on this vital topic.
Separate to the question of the UK maintaining its own, sovereign steel-making capacity, the fear of relying on "Chinese imported steel" feels like a red herring.
Every source I can find suggests that the UK imports steel from a very wide variety of countries, with no single nation providing more than 15% of total imports. Happy to be proven wrong on this.
Also, as Ed aludes to, this will not really do anything for "national security". Britain is still dependent upon a single steel mill which presumably could shut down due to sabotage, strikes etc. We are still "dependent" upon imported iron ore, coke and presumably a lot of specialist technical parts (I imagine there is all sorts of specialist software used in the process too, is that also critical to national security?).
Fascinating article, thanks. I've lived in a couple of US steel cities (Birmingham, AL and Bethlehem, PA) and my Dad worked in titanium manufacturing after retiring from the UK armed forces. Such a complicated industry with such a prominent place in the economies and sense of self of both the UK and the US.
I’m a descendant of blast furnace men -my dad and his dad. I’ve been to blast furnaces, watched them tapped, seen the dangers and also the wonders of it all. And in the end my home town went from being one of America’s leading steel producers to the capital of its Rust Belt. And largely because of a lack of national government strategy for maintaining a critical national industry.
I’ve been following British Steel’s grinding demise and what I consider is a Chinese strategy. In many ways it parallels the demise of the steel maker my forbears worked for. Vacant a government strategy, it began to fail, was bought out by foreign steel makers with promises; and they cut it apart monetizing what they could and let the rest die: replacing the lost manufactured steel products with imports from the owner’s home nation mills.
Energy! The UK’s insane focus on renewables has in part caused electricity prices to be double those of the USA; the home of the Great Industrial Revolution - the United Kingdom - is in danger of manufacturing-industrial collapse because of energy.
My hometown sits on Marcellus Shale and fracking has made the region a net exporter of natgas these last ten years. And now foreign investors have built two new smaller steel plants because they are economic.
What about global warming? Net Zero and all that? I don’t know ultimate route to a cleaner future. But I’m certain it is not going to be renewables like wind-solar. I don’t want my country down the “forever drain” in the meantime and accelerated downward by the likes of China. America’s continuance is in Trump’s “Drill, Baby, Drill”!
My forebears came here from England into the Virginia Colony in 1660. I identify as British. I want Britain to succeed.
You are completely wrong: the reason energy prices are so high in the UK is that they’re pegged to the wholesale price of gas (the most expensive source required to meet a demand), not renewables. The LCOE price (including plant & distribution costs) for renewables is typically 1/2 to 2/3 that of gas, and that gap will only increase over time.
Not the whole story -
The Levelized Cost of Energy (LCOE) for renewable sources like solar or wind does not typically include the cost of providing energy when those sources aren't available — such as during cloudy days, nighttime, or calm wind conditions.
Which means you need to retain base load power capability - and that adds to the bill.
Nope: LCoE does include the availability/load factor for any given source, so that’s already factored in to the calculation, viz:
LCOE is essentially the average cost per unit of electricity generated over the lifetime of a plant. It includes:
• Capital costs (construction, financing)
• Operating and maintenance costs
• Fuel costs (where applicable)
• Decommissioning costs
• Capacity factor/load factor
I’m not arguing against some base load generation and supply diversity, but some lobby groups massively overstate its importance in today’s generation mix.
Capacity factor measures a power plant's actual output relative to its maximum potential output over time, focusing solely on that technology's performance. It doesn't account for costs, backup systems, or alternatives needed for reliability.
You can use system LCOE with reasonable estimates of social costs/externalities though.
100% Renewables + Storage:
Base System LCOE: $120-210/MWh (midpoint: $165/MWh).
Adjusted (with $185/tCO2): -$80 to $137/MWh (midpoint: $30/MWh).
Coal/Gas Grid:
Base System LCOE: $84-132/MWh (midpoint: $108/MWh).
Adjusted: $183-340/MWh (midpoint: $261.5/MWh).
Conclusion: Using the Nature study’s $185/tCO2, the renewable grid is dramatically cheaper when externalities are included, with a midpoint ~$231/MWh lower than fossil fuels. Even at the high end ($137/MWh), renewables undercut fossil fuels ($183/MWh minimum). The higher SCC amplifies the climate penalty for coal/gas, making renewables a clear winner.
Nowhere in the world is paying $185/tCO2, a figure dreamt up with no basis in real costing simply to produce a desired outcome. It is a putative tax, not a real one, let alone a resl cost.
"Nowhere in the world is paying $185/tCO2" - That isn't how negative externalities (social costs) work. They are paid, they just aren't paid by the polluter.
In the US, the latest estimates, released in 2023, by the Environmental Protection Agency (EPA) placed the central SCC at $190 per ton of CO2.
Of course it doesn't - it's not (and not meant to be) a generation/distribution modelling tool, but simply a rather assumptive and generic metric for lifecycle generation cost. Much as I'd like to see a bottom up model specific to each plant, this is what we currently have.
Do some research on the costs of uk electricity
LCOE costs and not real world costs. You can study what we really pay by looking at the CFD data from the Low Carbon Contracts Company which show generator by generator what they generate and what strike price they received for their output. You can work out the costs of ROC subsidies using data from OFGEM, again generator by generator, or using summarised data from DESNZ. You can look at company accounts to see their revenues for generation and curtailment. All these sources demonstrate that LCOE is fiction.
The CfD strike price isn't what we pay, it's what the generator is guaranteed should they sell the power in the reference markets. What they get is based on what they sell it for. While the CfD is structured to guarantee that price the generators aren't selling their power in those markets (the volume in the markets hasn't substantially changed since 2012.) As such it's fair to assume they are selling it under PPA and in some way hedging their market/CfD Strike Price risk (probably some financial derivative instrument.)
Just for completeness: the CfD support isn't from the government it is from power suppliers to the LCCC; the budgets for the CfD (set through the levy control mechanism) have been under utilised, so much so that some allocation rounds (e.g. AR2) have had negative utilisation; the negative utilisation is payment back to the LCCC by CfD contract holders, those payments get redistributed to power suppliers; the reason payments are made back to the LCCC is because power prices are high, because of high gas prices; so extraordinarily, yes, low carbon generators have been subsidising gas fired electricity generation.
The CfD may well (eventually) be recognised to be possibly one of the worst policy instruments ever.
Have you looked at the price of gas ? Hint - it's been falling recently. Uk electricity prices are high because of green subsidies, the cost of expanding the grid for windmills, and carbon taxes.
Coal power (as in China), is the cheapest form of electricity generation.
Dear lord, the delusion is strong in this one. You seriously Have. No. Fucking. Idea.
It's quite clear you do not.
What do I know? I guess I’m only a data scientist whose company works on the evidence-driven ramifications of accelerating climate change. Oh, and I’m an advisor on government R&D programmes, including energy systems and system modelling. So, apart from several decades experience in deriving actionable outcomes from understanding complex data…
Ah - a modeller !
Should have guessed.
Maybe try looking at real DATA for a refreshing change ?
Oh, so you're basically an environmental activist with an axe to grind. This is exactly why I want to split England in half - hysterical, deluded members of the quasi-intelligentsia can live in the south, and practical members of society can live in the North.
That is completely wrong. The true cost of renewables is much higher than the cost of gas or of electricity generated from gas. Just at the wholesale point of connection to the grid we have CFDs that pay an average of over £150/MWh, ROC subsidised renewables that enjoy subsidies averaging over £100/MWh on top of market prices, and feed in tariffs that average over £200/MWh. You can easily look these figures up from official sources. Then there is the opaque addition of REGO certificates that all renewables are entitled to that add £10-15/MWh to bills. These are real costs, not the imaginings of wet behind the ears analysts at Lazards who have never held a real energy industry job.
Then there are all the additional costs required to integrate renewables supply: the extra pylons and interconnectors and batteries and other equipment needed to maintain grid stability, and the substantial additional balancing costs including curtailment because renewables output is unreliable, as well as the costs of providing backup.
Gas ended the week at 83p/therm, or about £28/MWh on an NPB wholesale basis. You can make electricity for double the gas cost, to which you must add carbon taxation that depends on the mode of operation: as baseload it adds about £14/MWh. In inefficient ramping modes to match variable renewables output that can run to £20/MWh . So we have a gas generation cost including green tax of £70-75/MWh, well below the cost of renewables which are more than double the cost, plus extra for the integration costs.
I reviewed the residential electricity rates across 40 European nations.
The 12 largest industrialized economies have an average rate twice as high the average of the 50 U.S. states: $0.35 per kiliwatt-hour vs $0.17. The UK is the 4th highest of the 50.
The average EURO area is $0.29. France (at near all nuclear) is $0.28. Norway & Iceland (hydro & geothermal) at $0.18. 25 other nations (largely in the east and mostly relying on fossil fuels for electric power) is $0.19.
Getting verifiable comparative energy prices for China and India is difficult. But - there are suggestions that China’s comparative residential electricity rate is $0.10 and India at $0.07. Both are on the rise, but extremely competitive vs the developed world.
China has a 20 year natgas pipeline import agreement with Russia that is so large it’s worth near 2% of GDP to Russia. China is building ~100 coal-fired electricity plants a year, and has 24 nuclear plants under construction at the moment with 100 funded in the current 5-year budget. Yes, it is building a lot of wind-solar, but if you look at location, it’s niche applications. Fundamentally, China has been building its economy on fossil fuels, and is transitioning fir a cure of nuclear..
Not to argue or even wanting dialog, my personal opinion is that whatever the Western European continental nations (not the eastern continental nations) and the U.K. & Ireland are doing in energy sourcing, federal subsidies and national government regulation is producing the highest energy costs in the world. And the industrial - manufacturing sectors of those nations are faltering.
So too, over the past decade the combined GDP of the European Union members has been mostly flat. The GAP in annual GDP growth has widened nearly double relative to that of the USA. Moreover, export trade constitutes 50% of the EU’s GDP (doubling over the past two decades). The USA export component of USA GDP has been flat that same period at 10%.
My energy observation is the Western Europe including the UK is at risk due to over-reliance of export trade while high, high energy prices are making its industrial-manufacturing sector uncompetitive.
In the end, Trump’s primary concern is with the USA is energy costs; and with his tariffs threat policy is simply going to “Put America First” through exploitation of fossil fuels coupled with reducing corporate taxes, minimizing government regulation and just last week issued an Executive Action to fully expedite potential foreign investors’ applications into the USA to capitalize of cheap energy and low taxes - all for access to the USA’s $29 trillion GDP economy (vs the EU and China tied at 2nd place at $18 trillion GDP each).
To date, I have tabulated $750 billion of new investments from foreign manufacturers perhaps driven by Trump’s tariff threat and foreign investment inviting policies. They include new steel mills, auto manufacturers, electronic chip makers and a joint venture proposal being considered to participate in the drilling, fracking, pipeline transport, LNG facility and new west coast Alaska $50 billion natgas project in Alaska’s Arctic. The participating foreign investors would share in the export profits through favorable pricing of LNG they buy! All under negotiation, but again, Trump’s goal is to make America an unparalleled global industrial manufacturer.
I’m hoping the Western Europe looks internally at what is disabling its economy, and what can be done to reverse the trend. I think it’s energy prices followed by socialist-minded bureaucrats having no business sense.
A thought! Look at energy de-regulation. The State of Texas is fully energy deregulated. My son (in the general north central Dallas area) annually bids his electrical energy needs from ~18 alternative suppliers and his incoming transmission & distribution service to a ~8 others. He pays $0.15 per kilowatt-hour. Other states are beginning to follow suit.
Lastly, I intend no insults with these comments. I just worry for my “home country” - the U.K. The loss of basic steel making is another self-inflicted dagger in the UK’s economic heart.
Not to mention you cannot wage war without a blast furnace much less defend against one nor win one.
The UK operates a subsidy scheme in which the price paid for renewables is adjusted to compensate the renewables supplier if market prices are below their contract price. The renewables supplier must refund the difference if market prices are above the contract price.
In almost every period, except for a brief period in 2021 when gas prices spiked, the prices paid for renewables has been higher than the market price.
Consumers pay higher prices for renewables and also pay for the extra costs of backup systems and grid balancing.
For in depth research about the true costs of renewables in the UK, follow David Turver here on Substack. He does the research and provides real data, not fictional LCOE data.
You're referring to the CfD scheme operated in the UK. It's original intent has been subverted by market players, to the point where it contributes significantly to the cost of energy in the UK, which would otherwise be falling, and Scotland (for instance) generated 113% of total national demand from renewables, yet Scottish consumers pay the highest energy prices in the UK.
But you're referencing a market pricing system, not the inherent life cycle cost of generation. So getting rather off the point of the comment thread.
I am referring to all the pricing for renewables. Maximum prices for CFDs were set by government, and actual prices are the result of auctions to build the capacity. There is no subversion by market players. Likewise the levels of subsidy in ROCs are determined by government, and likewise for FiTs. These prices and subsidies are set precisely with the aim of covering the life cycle costs of the generation, which fell initially but have stabilised or increased more recently: AR5 produced no bids at all for offshore wind and some AR4 capacity has been cancelled as uninvestible at the price tendered.
I do not think you understand what the inherent life cycle cost of generation is, because you exclude many of the inherent costs. Moreover, these costs increase as the penetration of renewables increases. The first few wind and solar farms make little difference to grid operation, but add more and local grid instability becomes an issue (in fact for tidal stream generation it has proved an issue for even the smallest projects, such as Bluemull Sound in the Shetlands which is prohibited a direct grid connection being forced to smooth output and incur round trip losses via its own grid battery, and ditto for the Orbital 2 project in the Orkneys). Add more, and transmission proves inadequate on windy/sunny days. Add more and you must curtail to maintain adequate grid inertia or risk blackouts. Add more, and you need to consider whether you can export to a neighbouring grid at a cost for the interconnector and a price for the output that makes economic sense. Add more, and you start to look at the economics of storage for highly variable and highly intermittent surpluses, or the alternative of simply curtailing output. All the while cost is added in providing flexible generation to ensure demand is met and available when there is no wind or sun.
Each addition adds a fresh layer of cost and increases the cost of the previous layer. It is you who is getting off the point by failing to understand the real world.
Renewable generation at times provides significantly in excess of the Scottish needs for sure but at other times they have to import so are they prepared to pay the higher price then. Probably not which is why we have an average price across the UK that treats everyone equally. Also majority of Scottish renewables currently comes off ROC supported windfarms and they are receiving a much higher price then the CfD sites are so not sure the price would be as low as people make out who too often use the marginal cost anyhow not the long run cost.
The greater the diversity of low-carbon generation and the greater the interconnectedness of grids, then the lower overall capacity needs to be to support ‘worst case’ scenarios. Connectivity is therefore effectively a generation multiplier. I was making the point about Scotland primarily as just one illustration of how completely screwed up the UK energy market model is.
What is for sure is the complete failure of OFGEM over nearly a decade to agree to grid expansion that the three transmission operators were asking for. The consequences of this are there for all to see in the high levels of constraints now imposed on Scottish wind when its urgh windy (you couldn't make it up!!). We also have the farce of Seagreen which theoretically should have one of the highest load factors having been constrained off more than it has generated. OFGEM have been cajoled by DENZ to get on with grid expansion now but much of that will just neutralise todays problem not deal with the future needs of the country.
Slightly redundant comment when we're referring to a blast furnace with basic oxygen furnace here, which uses relatively little electricity. The raw material and labour costs are the main distinguishing factors vs. other countries' production.
Not quite sure what your point is Will, as Scunthorpe Steelworks (British Steel) utilizes Basic Oxygen Furnaces (BOFs) as part of its steelmaking process. These BOFs are crucial in converting molten iron into steel, using oxygen to reduce the carbon content🤔
Hi Barry, apologies if not clear - my point was in relation to the long thread of discussion on the importance of electricity prices for Scunthorpe's competitiveness. I was saying that electricity prices are of limited importance because it is a BF-BOF, and will therefore use relatively little electricity from the grid.
In 1960’s and 70’s was an electrical technician at Scunthorpe Steelworks, initially employed at Redbourn Works, then moved on to the Anchor works. During my time there did visit Main Works (Appleby-Froddingham’s) BF’s Generator and Blower House. Energy was relatively cheap then, as UK’s Coal Mines were still in operation, and Steelworks had a number of coking plants, producing steam and coal gas as well with as steam and coal gas from BF’s used to drive steam turbines, generate electricity, as well steam and coal gas distributed to the Iron and various steel making processes. In 1970’s North Sea NGas introduced🤔
I appreciate your concern George but, in the 1960’s the last of the IRON ORE MINES closed. From then on all the following ARE IMPORTED:
IRON ORE
IRON ORE IN THE FORM OF SINTER
METALLURGICAL COAL/COKE
IRON PYRITES
CRUSHED LIME (Maybe sourced locally)
Virtually all of the above are shipped in to Immingham docks some 25 miles away, then unloaded, then loaded onto freight railway and taken to Scunthorpe Steelworks where it’s unloaded again.
Perhaps if Scunthorpe could go back to mining its inferior Iron Ore instead of importing higher quality, and the Greenies could turn a blind eye to use of British metallurgical coal/coke, they might just be profitable, though I very much doubt it, if the Labour Government yet again Nationalise it, it will continue to be a mill wheel around British Tax Payers necks, great maybe for Scunthorpe and it’s steelworkers, but not for the rest of British Tax Payers🤔
See also my more detailed comment in the thread.
I think there’s rather a difference between “disagreeing with management’s strategy” and “allowing the last blast furnace in britain to be shut down”. The wording is a bit disingenuous as it makes it sound like they’re taking it over because the government disagreed with their pay or marketing or something when it’s more a question of preserving knowledge.
Good point Lukas …
As well as knowledge, I’d just add, for what it’s worth, it seems to me it’s also skills, domestic production & dare I say it … community cohesion …
Yes, change & streamlining will b needed, yet down the line … & the Chinese Company looks like it’s been playing fast & loose with blast furnace operations … a potential agenda for ‘change’ … so I feel this is a v justifiable move by the Government in the circumstances of what looks like last resort …
There’s a lot of emotion in there Ed. If you visited Scunthorpe Steelworks you will have seen that the Steelworks lies on the North and East side of Scunthorpe, on travelling to Scunthorpe/Steelworks you’ll have noticed that it is ~25 miles from any town of any significance, that’s Hull, Grimsby, Lincoln, Doncaster. Scunthorpe is known as an Island Town for good reason its agricultural land between Scunthorpe and the towns I’ve mentioned. In simplistic terms the only reason Scunthorpe Steelworks is where it is, is because that’s where the Iron Ore was discovered. I know quite a lot about Scunthorpe’s steel making and social history. I worked there in the 1960 and 70’s predominantly at the Redbourn and Anchor steelworks sites.
My wife’s great grandfather was the manager for the Midland Ironstone Company one of the early Iron Ore mines, he was also the one of the amalgamators in creating Scunthorpe, as the main name in amalgamating of five smaller agricultural villages: Scunthorpe, Frodingham, Crosby, Brumby, and Ashby. This occurred primarily due to the growth of the iron and steel industries in the 19th century. The Iron Ore was initially transported to West Yorkshire for smelting, the smelting areas in West Yorkshire were surrounded by coal mines. As more Iron Ore mines opened up in the 19th century smelting started in Scunthorpe area, and so the town grew. Shortly after I joined what became British Steel in 1960’s the last Ore Mine Closed for the reasons you’ve given that of better quality and cheaper Iron Ore from abroad. From there on the Steelworks became less and less profitable. The rest is just history.
This from the wonderful University of Google👇
Since 1960, the Scunthorpe steelworks has had four distinct owners, including the government through the British Steel Corporation (BSC). Subsequently, it was owned by Corus, Tata Steel, Greybull Capital, and currently, Jingye Group.
Here's a more detailed timeline:
1967-1988: The British Steel Corporation (BSC) owned Scunthorpe, following nationalization in 1967.
1988-1999: Following privatization, the company became part of Corus.
1999-2007: Corus was acquired by Tata Steel.
2016-2020: Tata Steel's Long Products Europe business, including Scunthorpe, was purchased by Greybull Capital, which later put the company into liquidation.
2020-Present: The Chinese steelmaker Jingye Group acquired the Scunthorpe steelworks.
Perhaps if Scunthorpe could go back to mining its inferior Iron Ore instead of importing higher quality, and the Greenies could turn a blind eye to use of British metallurgical coal/coke, they might just be profitable, though I very much doubt it, if the Labour Government yet again Nationalise it it will continue to be a mill wheel around British Tax Payers necks, great maybe for Scunthorpe and it’s steelworkers, but not for the rest of British Tax Payers🤔
"a mill wheel around British Tax Payers necks"
It amazes me how often national control of strategic industries brings out the predictable comments about the cost to the taxpayer yet one never hears similar about the gargantuan cost of propping up our bloated, corrupt finance sector.
Your comment Dave is a whataboutism, it provides no solution to the Scunthorpe Steelworks problem of not being profitable, and never will be because of the reasons I’ve given, it’s now geographically in the wrong place, if you’ve bothered to read what I’ve written. It’s become a political emotional issue simply because of Scunthorpe Town, a Town that without a steelworks is basically in the middle of nowhere🤔
The Chinese subsidise their steel industry, I see no good reason why we can't.
Scunthorpe is an issue precisely because the attitude adopted by people like you for so many decades has left the country with such little productive capacity in this area.
And again I note that the finance sector, which produces very little and yet costs the country vast amounts and has damaged so many actually productive sectors continues to get a pass.
“The Chinese subsidise their steel industry, I see no good reason why we can’t”
I can Dave, it sets a president for lame duck companies and industries to claim they are of strategic importance to UK’s security, so that they can claim they deserve handouts too. Just as you say about the financial sector, and which I wouldn’t argue against.
The Chinese system that we call ‘Communism’ separating it from the Russian model is defined by Xi Jinping as Socialism with Chinese characteristics. Xi Jinping promised the Chinese people common prosperity: more equal distribution of income but also saying not uniform egalitarianism, in general he’s kept to his word.
Check out this 8 minute video you might get a surprise “The Massive Chinese Cities You've Never Heard Of... Yet” https://youtu.be/wjRi0a19Dd0?si=fak9kaxaCmD2-JQD
“Scunthorpe is an issue precisely because the attitude adopted by people like you for so many decades has left the country with such little productive capacity in this area.”
You know nothing about me Dave so👇
“When you resort to attacking the messenger and not the message, you have lost the debate — Addison Whithecomb 🤔
China is not a communist country. It is a market economy with a very strong state. It is one of the most unequal in the world in terms of wealth distribution.
I lived in China for three years I know exactly what the country is like. It's blown a massive credit and property bubble because it's a culture which is obsessed with money.
I can literally predict what you're going to say about a given topic because of the vocabulary that you use: straight out of the Daily Mail / Telegraph lexicon - "lame duck companies" "handouts" etc.
The whole reason why the British government has been forced to intervene is precisely because the private enterprise has failed.
So you can predict what I’m going to say Dave, hmm I wonder. You see Dave have grandson and granddaughter in-law in China, they’ve been there 11 years, trumps your 4. They started out in Shenzhen, moved to Shanghai (were there all through C19), then Beijing, been there now 4 years. They have a very nice maisonette with a garden, and an āyí and yuányì gōngrén, both have very good jobs, are Uni graduates, one, a degree in geology, and the other in military mechanisation, they both earn double what they could earn in UK with a fantastic lifestyle, and no they’re not Chinese, coming from Viking and Celtic stock, so true English. They’ve provided my wife and myself with two great-grandsons, both births requiring T sections. The first birthed in UK by NHS, second in Beijing, and they’ve told me the Chinese health and natal care are superior to NHS. Now Dave what do you want to tell me about China, though you appear to have a negative opinion🤔
Such clear, insightful and helpful analysis Ed. Just sent yet another copy of your book to a friend!
A useful insight into what may be happening at Scunthorpe. I've just started reading Material World and will press on to get more background information.
I‘d agree that there is a lot to digest here and many questions remain unanswered, particularly by the obscure Chinese ownership. It certainly has something odd to it and reminds me of the Kremlin’s plan to dissolve Gazprom Germania through an intermediary to stir chaos on European gas markets shortly after the full-scale invasion.
Referring to your question in the article whether there is a precedent of an industrial facility being moved to China, yes, there is. In 2002, around 1,000 Chinese workers dismantled the then-ThyssenKrupp steel works in Dortmund, in the heart of the German “Kohlerevier”, transported it to China and rebuilt it step-by-step near Shanghai.
German media outlet Spiegel TV reported on it (sorry, article only in German)
https://www.spiegel.de/sptv/extra/a-219092.html
Britain occupies a special place in the Communist party's "century of humiliation" narrative. Over many many decades they have inculcated in their population a seething resentment about events from almost 200 years ago and the story becomes ever more extreme with each generation. When I left my Chinese university students had to attend mandatory history lessons on "European aggression".
As always Scotland has been the petri-dish of this kind of national resource/economic orthodoxy argument. Ravenscraig Steelworks was closed in 1992 on the basis of cheaper steel being able to be imported. This devastated the area around it and ended primary steelmaking in Scotland. England benefitted from many steelworkers who moved to Corby or elsewhere in England where steelmaking continued. I agree with the taking over of Scunthorpe for strategic reasons however these reasons never cut through in the Thatcher/Major years and certainly not for Scottish based raw material production. Grangemouth refinery is the obvious case of one rule for England another for Scotland. Of course the UK argument will be used as defence but this is obviously specious and partisan.
The whole of the UK was devastated by deindustrialisation not just Scotland.
I have also commented on this point
Thanks for this Ed. A lot of necessary and interesting context.
I too visited a steelworks, mighty Ravenscraig, in the 1970s. Then they were sadly blown up much later. I also watched the blowing up of the Scottish coal power station at Cockenzie under the Tories. The industrial sabotage of Scotland under Tories and Labour continues now with the closing of Grangemouth refinery in the country that provided huge wealth to the rest of the U.K. through its oil. I will be pleased if Scunthorpe survives , of course it should, it’s an essential industry, but you can’t help but ask if it is partly because it’s in England. All our Scottish essential heavy industries are closed. Thank goodness the Scottish Govt did not privatise water. Always enjoy your reporting Ed.
There's no dividend in Scotland for not privatising water. They have no idea how many storm spills go into the rivers there. We might not like the numbers but at least it's clear now in the UK the size of the problem. Just wait until you see the numbers in Scotland before wishing for something different.
Scotland has its problems but I’d much rather own water than not. Tastes fine to me
This history of water supply for Glasgow in the 19th and early 20th centuries is fascinating.
https://archive.org/details/b24400555/page/n11/mode/1up
"The industrial sabotage of Scotland"
The whole of the UK was sabotaged industrially. Your paranoid ethnocentric victim complex is wearisome.
I read your article w great interest. I know literally nothing about the steel industry in any country, and I appreciated the way you laid out details from start to finish. It helped me understand what i happened to watch on the BBC this morning. Very good information.
in basic terms we (in England to start with---then the rest of the world) built an economic structure based entirely on the continued availability of cheap surplus energy extracted from coal oil and gas.
there are lots of ifs buts and maybes, lots of economic/political shenanigans involved over time, but basically that was how it all started, and is now the root of our problem.
there's no cheap energy left in any meaningful quantity, but we, humankind that is, are behaving as though there is.
i've written a book on it, explaining the history of how we got here, coming out in June
https://www.whsmith.co.uk/Product/Norman-Pagett/The-Iron-Men-of-Shropshire--How-They-Put-the-World-to-Work/11935298
also on Amazon
our current iron age is over---we are witnessing its dying days
And most of the heavy equipment for mining was made at Coalbrookdale! The iron / steel industry was first built in the Black Country. I believe even the ventilation equipment used at some Scottish Mines was made there and transported up. It must have been quite a sight!
thanks---it was, i live just a couple of miles away from Coalbrookdale, and was weaned on the history of it all. which motivated me to write a book about it ---as a sort of tribute to my forebears.
Next up, the Stone Age?
who knows.
if you have ideas to produce unlimited cheap energy a resources forever---then no
otherwise???
Nuclear, but our betters are opposed, for our own good of course.
Dear Norman, are you the same Norman Pagett who’s my cousin?
Stephen Mason, born in Bilston to Rose & Ray.
Mason-s3@sky.com
What an excellent, evocative as well as insightful and timely overview of the background to today's parliamentary drama.
Thank you @Ed Conway
Governments subsidizing steel making has been the norm worldwide rather than the exception. Trump said it some time ago as you cited it Ed “if you don make steel you don’t have a country”. Then steel is not just about P&L and short term economics, it’s about long term geopolitics and social resiliency too. Chinese and Indians know it well, in Europe too but we have been more elusive to tackle it. Steel is arguably the most naturally Circular bulk product we can produce in Europe (electric arc scrap based) with a decarbonisation potential - including DRI - well established. CBAM should help curb the economics in Europe against Asian makers, but as you describe in your MW book, quality is key (the story of the Chinese premier and the ball-pen). Quality in a circular economy model is 360, is pure System Doing (not just thinking). When energy rather than material is the bottleneck, “we’re right” (remember E=mc2), although we all know that we need materials to harvest and transform this primary energy, a lot of them indeed. I’m not a steel maker myself, but I don’t see any other alternative to deeper diving in circular very low C steel making, not to shut down the whole industry. We can’t shut down industries in Europe, we need to revamp them with better oiko-nomics.
Partial parallels with what happened to MG Rover but in that case some of the manufacturing equipment was shipped back to China. I guess here it's just the customers who are being shipped out.
And a great and important post Ed. Thanks for putting the effort in on this vital topic.
Separate to the question of the UK maintaining its own, sovereign steel-making capacity, the fear of relying on "Chinese imported steel" feels like a red herring.
Every source I can find suggests that the UK imports steel from a very wide variety of countries, with no single nation providing more than 15% of total imports. Happy to be proven wrong on this.
Also, as Ed aludes to, this will not really do anything for "national security". Britain is still dependent upon a single steel mill which presumably could shut down due to sabotage, strikes etc. We are still "dependent" upon imported iron ore, coke and presumably a lot of specialist technical parts (I imagine there is all sorts of specialist software used in the process too, is that also critical to national security?).
Fascinating article, thanks. I've lived in a couple of US steel cities (Birmingham, AL and Bethlehem, PA) and my Dad worked in titanium manufacturing after retiring from the UK armed forces. Such a complicated industry with such a prominent place in the economies and sense of self of both the UK and the US.