Energy Prices Leave UK Steel On The Brink Of Collapse

Posted on 15. Jul, 2009 by Ross in Energy Prices, Metal Stamping & Steel, United Kingdom

The UK steel industry is facing oblivion in the face of falling demand and high energy prices which make it uncompetitive.

Anglo-Dutch steel firm Corus recently cut 4,000 jobs - a sixth of its workforce - and shut down two furnaces in Scunthorpe and Newport. Rotherham’s electric arc furnace, used for recycling scrap metal, is likely to be next for closure in an area which has already lost 1,000 steel jobs this year. The future of the Teeside Cast Products site is also in serious doubt, upon which approximately 10,000 jobs depend

Parallels are being drawn to the collapse of the British coal industry during the 80’s and 90’s, and steelworkers see a massive gulf between the treatment of them as opposed to the bank bail-outs. Despite the global recession though, campaigns to save the steel industry are targeting high energy prices as the main scapegoat.

Corus faces energy bills which are 10-20% higher than those faced by competitors in mainland Europe, leaving the company relatively uncompetitive. The UK Government acknowledges that this will become more and more pertinent to other companies too, as the nations pushes towards a cleaner, greener energy mix with more renewable power.

In the Low Carbon Transition Plan published this week, the UK Government acknowledges that energy prices will rise over the coming decade, and that improving energy efficiency is the best way for businesses to reduce or even reverse the additional costs to their bottom lines.

Although energy-intensive industries such as steel would have to make major innovative breakthroughs in their processes to make substantial company-wide savings, most other businesses can take easy and effective steps to mitigate rising energy prices. Energy-saving projects such as energy-efficient lighting can save tens of thousands of pounds a year, along with return on investment periods of under two years. Companies can also help fund such measures by applying for zero-interest loans from the Carbon Trust, whilst larger corporations can claw back expenditure via the Enhanced Capital Allowance scheme.

Image by Addictive Picasso @ Flickr