As we've been saying about Tata, Port Talbot and subsidies - No!

There is no good reason to be giving them any money:

Britain’s steel industry – the country’s manufacturing backbone – faces a reckoning as it attempts to play its role in tackling climate change.

Some £6bn is needed to slash carbon emissions in the steel industry and switch to electricity or hydrogen. Large players are turning to the government for help to avoid being pushed to the brink.

Earlier this month, Tata Steel UK, the owner of Port Talbot in South Wales, raised the prospect of closing the sprawling steel works if help from Whitehall doesn’t materialise.

The company, owned by India’s Tata Group, wants £1.5bn – about half the estimated budget to make the site green. Port Talbot, and British Steel’s Scunthorpe Steelworks, both use carbon-intensive blast furnaces.

We have indeed mentioned this before. But there is no - none, zip, nada - excuse for giving money to Tata at Port Talbot. A technical analysis for those who like such things:

Therefore, to decarbonize UK’s steel industry and reduce its reliance on coking coal, scrap-based Electric Arc Furnace (scarp-EAF) process, which is around three times more energy efficient than producing steel from iron ore, will likely be required to replace the role of integrated BF-BOF. In this process, ferrous scraps are recycled by melting them in an arc furnace using progressively cleaner electricity to produce secondary steel. This secondary method abates the requirement of mining new iron ore and using unsustainable coking coal, thereby reducing the carbon intensity of the steel making process.

However, despite the high steel recycling rate of 85% in the UK, scrap-EAF only accounts for 21.2% of UK steel production. In fact, only 1.7 million tonnes of the UK’s domestic ferrous scrap is used to produce steel via this process, thereby leaving the UK to net export 8.3 million tonnes of ferrous scrap annually. This means that the UK has a good growth opportunity for this form of coking coal-free production as it is well endowed with scrap resources.

To pull that out of the technicalspeak. There are three basic steel making technologies. Blast furnace - basic oxygen furnace (BF-BOF), direct reduction iron (DRI) and electric arc furnace (EAF).

Tata at Port Talbot uses the first. To be less carbon intensive it should - perhaps - more to one of the other two. If it were to go to DRI fed by green hydrogen then that would solve the carbon problem. This is also a technology not quite ready for prime time - the lack of green hydrogen is the limiting factor at present.

But Tata is not suggesting they move to that. Instead, they want to be subsidised to move to the third. EAF. This uses scrap as the input, it doesn’t actually make primary, or virgin, steel from iron ore at all. There is therefore no - none, zip, nada - argument in favour of subsidy. EAF is hugely less capital intensive. It costs less as well. There’s plenty of feed for it already in the UK and will be for decade upon decade.

Finally, there are some steels that you can’t make in an EAF furnace. Which means there might - possibly and just about you understand - be a possible argument for subsidy to maintain that domestic capacity. But if the subsidy is to move to EAF anyway then that argument doesn’t exist either.

Tata is trying it on. The correct answer to someone trying that on the taxpayers’ bill is a ripe volley of Anglo Saxonisms.

No. Other than that Tata would rather like to gain a subsidy there is no coherent argument for Tata to gain a subsidy for Port Talbot. They can and should pay for their own electric arc furnaces.