Ukraine invasion shows importance of UK steel industry for defence, bosses say

The war in Ukraine highlights how the UK steel sector is a ‘crucial defence asset’ that must be self-sufficient in times of crisis, an industry body says.

Thursday, 24th February 2022, 12:26 pm

Gareth Stace, director general of UK Steel, said the Russian invasion would have a ‘significant knock-on effect’ on spiralling energy prices that threaten the future of the sector, and it was time for government to trigger its plan to tackle them.

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He added: “The war in Ukraine yet again highlights how strategically vital the steel sector is to the UK. This conflict, and continuing uncertainty over energy costs, demonstrates that the steel sector needs to be considered of crucial importance and as a national defence asset.

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Furnaces at Liberty Steel in Rotherham.

“We take the PM at his word, that Government has a plan for addressing uncompetitive energy prices for sectors like steel and this dreadful conflict highlights the need to enact that plan today to ensure that the UK steel sector can be self-sufficient in steel at times of crisis like now.”

WHAT HAS GOVERNMENT SAID?

In Prime Minister’s Questions on Wednesday Boris Johnson said there was a plan to tackle industrial electricity prices which was with the Treasury.

At a Steel Council meeting earlier this week, steel bosses were told BEIS had a plan too, Mr Stace added.

Ukrainian military track burns at an air defence base in the aftermath of an apparent Russian strike in Mariupol, Ukraine, Thursday, Feb. 24, 2022. Russian troops have launched their anticipated attack on Ukraine. Big explosions were heard before dawn in Kyiv, Kharkiv and Odesa as world leaders decried the start of Russian invasion that could cause massive casualties and topple Ukraine's democratically elected government. (AP Photo/Evgeniy Maloletka)

Following news of the invasion, oil prices rose above $100 a barrel for the first time since 2014. And with gas pipeline Nordstream 2 on hold, UK Steel is predicting a ‘significant knock-on effect on energy prices’.

In 2020, the UK imported about three per cent of its gas from Russia, a third of its diesel and 11 per cent of its oil.

Between the winters of 2020 and 2021, energy costs rose as much as 3,000 per cent, says steel union Community, with an average of only five hours a day when power prices are low enough for it to be profitable to make steel.

In November, Liberty Steel relaunched production in Rotherham at night due to high energy costs. The company said its giant electric arc furnace would run from 11pm to 6am when costs were ‘comparatively lower’.

Almost 34,000 people work in Britain's steel industry.

Alasdair McDiarmid, Community union’s operations director, said: “Unaffordable energy costs are putting the future of our industry at risk. In some cases steel companies have had to stop production.”

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