BMRA: Impediments unnecessary for thriving UK green steel industry

The British Metals Recycling Association (BMRA) welcomes news of the U.K. steel industry’s desire to transition toward electric arc furnaces (EAFs), enabling it to compete on an equal footing with the rest of the world.

However, while it supports some of the sentiments expressed by UK Steel, the trade body representing the steel industry, in its report “Scrap: a strategic raw material for net zero,” the BMRA says the metals recycling sector already can deliver on many of the report’s policy recommendations.

The report calls for scrap policy that will allow the U.K. to create the conditions for a successful net-zero steel sector, noting that the U.K. produces approximately 10-11 million metric tons of scrap steel annually, though 80 percent is exported mostly to developing countries.

BMRA offers the following points, which it says could help alleviate UK Steel’s concerns:

• The U.K. metals recycling sector has supported its colleagues in the steel industry by fulfilling the entirety of its scrap metal needs and by backing its calls for better support from successive governments to help level the playing field between the U.K. steel industry and its European counterparts. Metals recyclers and the U.K. steel producers must work together to achieve a true green steel economy and complete the journey to net zero.
• Both metal recyclers and steel companies need the government to foster an economic landscape that encourages investment in the best available technology and skills to increase the quality and quantity of secondary materials. This includes an environment that recognizes quality scrap as a secondary material and not waste.
• There is evidence that partnership is possible such as through the RECTIFI project. RECTIFI partners, including BMRA member EMR, have invested more than 10 million pounds to create an new supply chain for high-grade recycled steel. It also is looking at sustainable alternative raw materials for cement production. The project is supported by a 3.4 million-pound grant from UK Research and Innovation as part of the Transforming Foundation Industries Challenge. 
• The government must be willing to set policy issues that support the use of U.K.-produced steel that comprises high levels of recycled content such as through green procurement policies and tax incentives. This also could include underwriting contracts between the steelmaker and the metal recycler to remove the issue of extended payment terms currently set by the steelmakers.  
• The U.K. metals recycling sector produces, on average, 10.6 million metric tons of scrap steel every year. Having declined by as much as 70 percent over the past 25 years, the U.K. steel industry now consumes some 2.5 million metric tons of U.K. scrap steel. UK Steel has projected that, conservatively, the industry will need 70 percent more scrap. This would still only be 4.2 million metric tons. 

Projecting to 2050, the BMRA says that even if all the proposed EAFs are in operation, UK Steel predicts the maximum demand for ferrous scrap is around 7 million metric tons. Even at that level of consumption, a surplus of around 3 million metric tons would remain, possibly without a home if exports are restricted. That could have a catastrophic negative impact on the price of scrap and jeopardize the viability of many metal recyclers, the BMRA notes, adding that the U.K. is not stripping itself of a resource through exports but maximizing its collection and recycling levels.

The BMRA adds that U.K. metal recyclers only export because the domestic market is not large enough, but as domestic demand grows, it will be met by U.K.-based suppliers as long as the economics make sense.  

The U.K.’s biggest export market is Turkey, which uses EAFs primarily, with less impact on the environment than the blast furnaces operated in the U.K. presently, the association adds.   

UK Steel says exports should be governed around “better environmental regulations.” However, under current regulations, “waste” can only be shipped to countries that operate to equivalent standards as those found in the U.K. and the European Union, BMRA adds.  

UK Steel must recognize that ferrous scrap is a globally traded commodity with a price set on the international stage, BMRA says, with the delivered quality of the scrap being linked to the demands of the purchaser. Metal recyclers would be willing to invest in further innovation if it was clear the domestic steel industry was willing to pay for these improved grades, the organization adds. 

“The U.K. scrap market cannot be compared to the majority of markets that have imposed export impediments simply because they do not have the significant surplus seen in the U.K.,” BMRA adds. “Any impediment to exporting could cause severe economic impact to the U.K. metals recycling sector, which could not only see the U.K. steel industry having to import scrap, but it could also reduce UK Steel’s net-zero ambitions to ruins. Any reduction in scrap arisings due to the adverse economic effects of imposed impediments may also severely impact the investment being made by the U.K. government in EAF technology.”