Publication - Minutes

Steel Sector Round Table minutes: November 2019

Published: 24 Feb 2020
Date of meeting: 20 Nov 2019
Location: NASUWT, Edinburgh

Minutes from the fifth meeting of Steel Sector Round Table, held on 20 November 2019.

Published:
24 Feb 2020
Steel Sector Round Table minutes: November 2019

Attendees and apologies

Attendees:

  • Richard Rollison (RR), Interim Director, Economic Development Directorate, SG
  • Gareth Stace (GS), Director General, UK Steel
  • Ewan MacGregor (EMcG), Economist, Zero Waste Scotland
  • Sean Parsons (SP), Head of External Affairs, SIMEC
  • Colin Clews (CC), Business Development Manager, Midland Steel Reinforcement UK 
  • Geoff Crowley (GC), Development Director, Highland Galvanizers & Colour Coaters
  • Gary McCullough (GM), Proclad, Int Forging
  • Kenny Jordan (KJ), Regional Officer, Unite the Union
  • Lisel Porch (LP), Scotland Office
  • Alastair Semple (AS), Scottish Manufacturing Advisory Service (SMAS)
  • Gail Duff (GD), Account Manager, Company Growth - Global, SE
  • Elisabeth Stark (ES), Head of Manufacturing & Construction, SG
  • Stephen Mann, Executive Officer, Industrial Sectors, SG
  • Mary Maxwell, Executive Officer, Industrial Sectors, SG

Apologies have been received from:

  • Chris Hagg, Commercial Director, CELSA Steel UK
  • Iain Sinclair, Chief Business Development Officer, Liberty Steel
  • Gordon Reid, General Manager, Vallourec Oil & Gas
  • Christophe Huot, Managing Director, Vallourec Oil & Gas UK Ltd
  • Stuart Sharp, Director, Alexander (Scotland) & Co Ltd
  • Simon Armstrong, Sales Director – Conductor & Domestic, Edgen Murray
  • Ronnie Blake, Managing Director, the Blake Group
  • Nick Mackie, Metals and Advanced Materials, BEIS
  • Keith Ridgeway, Executive Chairman, AFRC
  • Gordon MacRae, Managing Director, Liberty Steel Dalzell
  • Martin McHugh, Chair, Martec Engineering
  • Nick Shields, Managing Director, Scottish Manufacturing Advisory Service (SMAS)
  • Tony Stumpf, Managing Director, CELSA Steel Service UK
  • Gary Cook, Regional Officer, GMB Scotland
  • Paul Warren, Regional Organiser, Community Union
  • Gerry Tralongo, Director, Midland Steel Reinforcement UK Ltd
  • Gordon Haldane, Financial Controller, Proclad Int Forging
  • Dale Young, Senior Business Development Manager, Edgen Murray
  • Richard Warren, Head of Policy & Representation, UK Steel
  • Steve Thompson, Scotland Office
  • James Graaf, SIMEC    
  • Ross Murdoch, National Officer, GMB Manufacturing Section    
  • Robert Muir, Highlands and Islands Enterprise (HIE)    

Items and actions

Welcome and introductions

Richard Rollison (RR) explained he was co-chairing the meeting for the Minister for Business, Fair Work and Skills, who could not be in attendance. He welcomed everyone to the meeting, particularly those who were attending for the first time.

RR noted that all the actions from the 4th Steel Sector Round Table (SSRT) had been accomplished. These actions were: 

  • UK Steel to send SG copy of the Steel Charter
  • SG to convene a short life working group to look at the terms and conditions of the SSRT and the way forward
  • SG to publish minutes of meeting when they have been agreed by all

Steel sector update

RR introduced Gareth Stace (GS), the DG of UK Steel, who had taken over the co-chair role from Jon Bolton.

  • GS attended the World Steel Association Conference in the summer. He felt that the mood among steel producers at the conference was very bleak

UK steel sector deal, charter and reports

  • the UK Steel Charter was launched in spring 2019. Only 43% of steel used in the UK comes from the UK: the origin of the rest is unknown. UK Steel were pleased that 60+ MPs, Scottish Government, Welsh Government, etc have signed up. UK Steel were now trying to persuade industries like Network Rail to sign up. The aim had been to persuade governments and government departments to sign up, then arms-length bodies, and then private industry
  • UK Steel had now moved on from the Steel Sector Deal, which the UKG had not committed to. The New Deal for Steel (now relaunched as the UK Steel Manifesto for the 2019 election) was produced in summer. It listed 6 enabling actions which governments could take to help the steel sector
  • Sep 2019: 4th Annual Report on electricity prices was published. It shows that UK industry pays more than competitors in France and Germany

Safeguarding and exports

  • under S232 there was a tariff of 25% on all steel we send to the US
  • the EU was imposing safeguarding measures of a 25% tariff on steel from countries outwith the EU
  • leaving the EU without a deal would make the UK immediately subject to safeguarding measures which would impose a 25% tariff on all UK steel. 80% of UK exports could be subject to 25% tariff
  • Alastair Semple (AS): Asked where we export steel to. The answer was 50% to EU countries and 50% to the rest of the world
  • he considered that the steel industry needed the EU commission to give us an indicative quote but the EU Commission and Westminster were not communicating well
  • steel companies were losing orders every day due to uncertainty

Domestic demand

  • Kenny Jordan (KJ): UNITE had strong input in shipbuilding and were already campaigning for FFS ships to be built in UK – we can divert steel to domestic shipyards
  • GS: Defence procurement of steel could be improved. British companies could supply all that was needed if they were told in advance what the requirement was. At present, defence procurement requests are issued with very little notice
  • RR: There were plans to spend more on infrastructure, there was more work in development than appeared in the current steel pipeline report
  • Geoff Crowley (GC): Works at the other end of the supply chain. They have a big customer base and haven’t seen drastic signs of a slowdown but certainly a weakening in the market. The origin of steel was not of interest to his customers. The last 3 years had been uncertain but there had been no lack of orders. However at the moment there were a lot of projects waiting to be signed off – there is a hesitation to commit due to uncertainty
  • Gail Duff (GD): Liberty had seen a slowdown. European companies will not order steel from the UK as they were concerned that by the time it was delivered it would be subject to tariffs
  • Sean Parsons (SP): GFG was keen to decarbonise processes and believed that if UKG embraced change we could be world leaders. The UK had a low carbon grid, good infrastructure, R&D capabilities and good innovation and university partnerships. There were opportunities but they needed to be unlocked through investment. Commercially, the cost of moving scrap steel added to the appeal of recycling. The situation at Dalzell was very challenging, but with the right investment there was a huge opportunity. The critical question was do we produce steel or do we buy it?
  • GS: imports rising and exports falling. We have a vision as a sector but the UKG doesn’t
  • GS: The UK used 10 million tonnes of steel and produced only 7 million tonnes of steel so there was clear scope for the UK sector to grow
  • RR: Mr Hepburn believed that steel was very important to the economy and that we needed to look at our procurement policies to make sure we are meeting the net zero challenge. How can the Scottish Government support the sector and ensure resilience through this difficult period?

Steel recycling

Ewan MacGregor from Zero Waste Scotland gave a presentation on recycling of steel. The main points made were:

  • recycling has environmental benefits & economic benefits
  • Scotland gets commodity value for scrap but we don’t add any value
  • we export steel to Turkey, India, etc in effect we are exporting our carbon
  • Electric Arc Furnace (EAF) is fundamental to a circular economy. It could work as a balancing mechanism to deal with wasted power from renewables generating when demand is not that high

The following points were made in discussion:

  • GC: There was no appetite for recycling. How would we generate interest and support further down the chain when it was hard to make the organisations at the top of the economic chain take interest?
  • EMcG: Carbon benefits were enormous and the potential economic benefits were 500-600 jobs and £200+ million GVA
  • SP: Overproduction of steel worldwide made it cheaper to source the metal than to recycle and there was no market mechanism to reuse. What could SG do to encourage people to recycle?
  • EMcG: There were issues to be addressed that were barriers to reusing steel such as Health & Safety concerns when reusing steel for construction
  • GS: UK Steel had put to UKG fully worked up solutions, compliant with state aid
  • Border Taxes: on the table again. Consumption emissions – we are importing carbon and exporting jobs we need the true carbon footprint
  • EMcG: Digitisation could be helpful here e.g. scanning all components in white goods to see where they came from. This would allow the true carbon footprint to be calculated

RR explained the SG’s position on the Net Zero Carbon vision for steel:

  • the Scottish Parliament legislated for Net Zero by 2045 a few months ago with an interim target of reducing emissions by 75% by 2030, which is very stretching
  • SP: Suggested measuring carbon consumption and not just carbon production. Only measuring based on production could lead to meeting the targets by offshoring jobs
  • KJ: The UK should not be exporting recycling: there should be some monitoring of industries sending steel round the world
  • EMcG: Noted that there was a team at ZWS looking at consumption-based carbon

Clean Steel Fund

  • RR: SG was working closely with UKG to help capture Industrial Strategy funds for Scotland. The SG are working to raise awareness and put together consortia. Mr Mackay met Andrea Leadsom (Secretary of State for Business, Energy and Industrial Strategy) recently to discuss this
  • RR: Asked group members for comment on the Scottish Government draft response to the Clean Steel Fund
  • GS: Agreed with draft response as it stood and also believed there were some points to be made around the cost of electricity, the circular economy and border taxes
  • GS: Felt that this fund should be technologically neutral and should consider traditional production and Electric Arc Furnace production of steel
  • there was a feeling that there needs to be more cohesion and transparency around available funds

AOB

  • RR: The research that the Steel Sector Short Life Working Group wished to commission has gone out to tender and the contract awarded to Warwick University. They were due to produce an interim report by the end of January, and a final report at the end of March
  • RR: The First Minister has set up a National Advisory Council on Women & Girls. RR brought to everyone’s attention that there was now a free resource for employers and training providers supporting them to develop a happier and more inclusive workplace. Links would be circulated
  • RR: Made the point that the SG is committed to transparent government as much as possible and would therefore like to continue publishing the minutes of the Steel Sector Round Table on its website. All in attendance agreed

Actions:

  • GS will send on steel documents mentioned: SG to circulate to members of SSRT
  • SG to circulate its submission to the Clean Steel Fund to the members of the SSRT
  • SG to send out all the links to the Equalities information discussed at the meeting
  • Once the minutes of the meeting had been circulated and agreed they would be published on the SG website