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Steel bosses demand electricity price cut to boost industry and help workers

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Thousands of steel jobs are under threat unless ministers slash sky-high energy costs, the industry warns today.

Cash-strapped British metals’ firms pay twice as much for electricity as French rivals and 50% more than German counterparts, research reveals.

Bosses fearing for the long-term future of the sector urged the Government to step-in and cut bills so UK mills can compete with foreign plants.

They said consistently higher prices “deter international investment, ultimately endangering UK steel production and jobs”.

A study by the industry, The Energy Price Scandal: A Fair Power Deal for UK Steel, shows the average electricity price for steel producers in the UK this year is about £65 per megawatt hour (MWh).

Steel industry jobs are once again under threat

It is £31/MWh in France and £43/MWh in Germany.

The energy cost difference between German and UK steelmakers has rocketed from £18/MWh in 2017-18 to £22/MWh in 2018-19; and between French and UK power prices from £17/MWh in 2017-18 to £34/MWh in 2018-19.

A typical steel site could use more than half a million MWh each year.

UK Steel director-general Gareth Stace said: “This is the third year we have analysed the disparity between the electricity prices faced by UK steelmakers and those of their EU competitors, and the third year it has increased.

“Electricity is one of the biggest costs for the steel industry and it damages our competitiveness that we are consistently forced to pay significantly more.

Electricity prices for high-consuming firms are higher in the UK than France or Germany

“The gap continues to widen and our steel industry is losing out.

“This price disparity can now add up to £17 to the cost of producing a tonne of steel.

“This can be the difference between winning and losing a supply contract.”

Manufacturers said cutting energy costs for British producers to a similar level faced by German firms could unlock £55million a year extra in investment – a 30% boost, UK Steel said.

The Mirror has been calling for an energy price cut for steel firms as part of our Save Our Steel campaign, launched in 2015 as the industry was battered by ob losses and factory closures.


Tata Steel steel plant at Port Talbot

Companies hoped the Government’s Industrial Strategy launch last year and a review into energy costs would pave the way for a price cut.

But Mr Stace said: “We’ve made no progress; indeed, we have gone backwards.

“The direct impact of higher electricity costs is being felt by the steel industry at a time of high market uncertainty with the UK leaving the EU and protectionist tariffs in place in the US.

UK Steel director-general Gareth Stace

 

“The price disparity continues to erode the industry’s ability to attract international investment.

“Investments will instead be made in markets with more favourable conditions, further damaging future UK competitiveness.

“The Government needs to step up now to tackle this critical issue, matching the confidence and support supplied to industry by governments elsewhere in the EU.

The Tata Steel steel plant at Port Talbot

 

“Specifically, it must commit to eliminating the disparity over a given time period, track the price of energy for energy intensive users against their international competitors, and match the exemptions and compensations given to steelmakers in France and Germany.

“It is high time the Government ensured the future viability of the UK steel sector.”

The UK steel industry directly employs 31,900 workers and supports an estimated 50,000 jobs in its supply chain.

The industry pumped £1.6billion into the economy last year, with an additional £3.9billion generated from supply chains and local communities.

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