A statement from the British Metals Recycling Association (BMRA) regarding UK Steel’s policy recommendations on UK scrap metal points to existing surplus of supply.
The British Metals Recycling Association (BMRA) has welcomed the recent news that the UK steel industry is looking to transition towards being an Electric Arc Furnace (EAF)-led steel industry, thus enabling it to compete on an equal footing with the rest of the world.
Following this news, the trade body that represents the steel industry, UK Steel, published a report entitled: Scrap: a strategic raw material for net zero report. BMRA supports some of the sentiments behind the report and looks forward to enabling UK Steel to achieve some of its objectives. In many cases, however, the metals recycling sector can already deliver on many of UK Steel’s policy recommendations.
BMRA considers the following points may go some way to assuaging any concerns.
Enabling a thriving UK steel industry
The UK metals recycling sector has long supported its colleagues in the steel industry both 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 UK steel industry and its European counterparts. Only by working together will we achieve a true green steel economy and complete our journey to net zero.
Working together to foster an environment of innovation
Both metal recyclers and steel companies need the Government to foster an economic landscape that encourages investment in best available technology and skills to increase the quality and quantity of secondary materials. This includes an environment that recognises quality scrap as a secondary material and not a waste.
There is already evidence that partnership is possible such as through the RECTIFI project. RECTIFI partners, including BMRA member EMR, have invested over £10 million to create an innovative new supply chain for high-grade recycled steel. It is also looking at sustainable alternative raw materials for cement production. The project is supported by a £3.4 million grant from UK Research and Innovation as part of the Transforming Foundation Industries Challenge.
We also need a government that is willing to set policy issues that support the use of UK-produced steel that comprises high levels of recycled content, such as through green procurement policies and tax incentives. This could also include underwriting contracts between the steel maker and the metal recycler to remove the issue of extended payment terms currently set by the steel makers.
Scrap steel volumes: now and in the future
The UK metals recycling sector is extremely effective at what it does. It produces, on average, 10.6 million tonnes of scrap steel every year. Having declined by as much as 70% over the past 25 years, the UK steel industry now consumes some 2.5 million tonnes of UK scrap steel. UK Steel has projected that, conservatively, the industry will need 70% more scrap. This would still only be 4.2 million tonnes.
While timelines may be a moot point, projecting ahead to 2050, even if all the proposed electric arc furnaces are switched on, the maximum demand for scrap steel is predicted by UK Steel to be around 7 million tonnes. Even at that level of consumption, it would still leave a surplus of around 3 million tonnes, possibly without a home if exports are restricted. That could have a catastrophic negative impact on the price of scrap and jeopardise the viability of many metal recyclers.
The UK is not stripping itself of a resource through exports but simply maximising its collection and recycling levels. Any restrictions could lead to recycling levels being compromised.
Metal recyclers in the UK only export because the domestic market is not large enough. As domestic demand grows, metal recyclers will comfortably meet this demand; as long as the economics are there.
Environmental and social arguments
Currently, the UK’s biggest export market is Turkey, where it is mainly smelted in EAFs, a technology that has a lesser impact on the environment than the blast furnaces currently operated in the UK.
In addition, UK Steel states that 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 UK and the European Union.
It is also surprising that UK Steel raises both environmental and social concerns about export markets, yet the UK is content to import from said countries. This is why any standards regarding sustainability must be applied across the whole supply chain.
There is also an assumption that exporting what it terms ‘lower quality scrap’ means that non-ferrous metals within that load are not recovered. This is perplexing as no matter where they operate, steel mills do not want large residual volumes in the mix. Even if these non-ferrous metals were recovered in the UK, much of these arisings would still be exported due to a lack of processors/foundries in the UK.
Economics
The UK Steel industry must recognise that scrap steel is a globally traded commodity with a price set on the international stage. The delivered quality of scrap is linked to the demands from the purchaser, be they domestic or overseas. Metal recycling companies would be willing to make investment in further innovation if it was clear the UK steel industry was willing to pay for these improved grades.
The UK 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 UK. Any impediment to exporting could cause severe economic impact to the UK metals recycling sector, which could not only see the UK 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 UK Government in EAF technology.
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