Sometimes you have to admire populist politicians for their sheer audacity.
One such occasion was Monday 10 July, when Houchen and his TVCA media team came up with a “Green Steel” press release about a Norwegian start-up company, Blastr, investing £1bn in a Green Steel Plant at Redcar Bulk Terminal (RBT).
Houchen’s press release was duly copied and pasted by the Gazette, Northern Echo and other client news organisations who, didn’t appear to fact-check it.
So I will.
When is a shortlist not a shortlist?
The press release was couched with all of the caveats and weasel words that we’ve come to expect – “earmarked” “possible site” “this could be the catalyst” “high skill jobs” and the good news from Houchen that the shortlisting of RBT by Blastr was “exciting news”.
But wait a minute: Blastr say that they’ve signed a Letter of Intent with RBT. If they’ve done this, it means that Blastr have already chosen RBT as their supplier. And if you’ve already chosen your supplier you don’t need a shortlist.
I’d like to see this Letter of Intent, because if the TVCA and RBT can’t produce it, there’s a strong suspicion that they are making up another infrastructure project out of thin air. I’ve written about this caper in the past – see here.
The myth of Green Steel (the science bit)
The press release exploits an illusion that we can find easy “green” solutions to the energy-intensive industrial processes that are setting fire to our planet.
In the case of steel, the world’s most polluting industry, this illusion is particularly dangerous. To make steel you first need to make iron, which is done by heating iron ore to 2,000° Celsius. In a separate process you then blend in carbon and other metals. There is no short-cut to make all of this happen. If you heat the iron using coal you will use one third of all the coal burnt in the world, which is the case right now.
If you completely replaced coal with hydrogen, you could reduce energy consumption by one third, but you would still need to use 1/3 of the entire world supply of electricity to produce steel. We’d need an awful lot of new power stations to do this, renewable or otherwise.
If you are fortunate to have an abundant local supply of renewable energy, such as hydropower, you can mitigate the problem. Some new “green” steel plants in Sweden are doing this, but these will never more than scratch the surface of global steel demand. An additional problem that hydropower projects throughout the world are being compromised by fluctuating water supplies caused by climate change.
The Electric Arc Lark
Electric Arc Furnaces (EAFs) are also touted as a Green Steel solution. In a recent North East Bylines article I covered how Ben Houchen has already failed Teessiders in this regard by promising an EAF in Teesside that was never going to exist.
But if EAFs are so fantastic, how come they lose money hand over fist? The UK’s three largest steel companies have all got the begging bowls out asking for huge taxpayer subsidies to run their furnaces. Tata wanted £3bn for their Port Talbot plant. Chancellor Jeremy Hunt gave them £300 million. He also gave British Steel £300million for their EAF in Scunthorpe. But Hunt knows that in both cases this is a sticking plaster and that these companies will soon be back pleading for much more. Liberty Steel asked for a subsidy for their EAF at Aldwarke near Rotherham, but due to corporate governance issues related to their owner GFG Alliance and it’s relationship with “financier” Lex Greensill, this request is in abeyance.
So why is this Blastr project at Redcar so utterly ludicrous?
Well, it certainly isn’t green, and the costs are eye-watering. But, hey, if companies that have been established for centuries can’t make Green Steel pay, why not hire an obscure Norwegian company founded in 2021 that’s never made steel before?
To make the iron-ore pellets you’ll first need to ship iron ore from the other side of the world (Australia or Brazil) in 200,000 tonne dry bulk carriers powered by Heavy Fuel Oil. You then need unload the ore, crush it and screen it to a “fine product”. You then mix in fluxing agents such as limestone and bentonite, heat it to 1350º Celsius, then feed it through balling drums to produce pellets 12mm in diameter. This is a very energy-intensive process, which generates problematic amounts of dust.
Pellet plants are incredibly different to keep operate. British Steel built one in Redcar in 1979. £500 million and 5 years later, they couldn’t suppress the dust to safe levels, or manufacture the pellets to the specification required, and the plant was shut down.
When the pellets have been manufactured, you load them into another dry bulk carrier powered by Heavy Fuel Oil and ship them 3,000 km to Inkoo in Finland.
To describe the above process as “green” is to abuse the English language.
Why not cut out the middle man?
If Blastr are serious about building a steelworks in Finland (which I very much doubt, to be honest), there’s a much cheaper and greener way of doing it.
The Kiruna mine in Sweden is the largest iron-ore mine in the Europe, and it’s only 1000km away. Why not ship the iron ore from there? And because Sweden and Finland are both in the EU and Customs Union, there’d be no Brexit red-tape, customs or tariffs to increase costs. The energy and cost savings compared with the Redcar operation would be substantial. If this new steel plant is unable to achieve the impossible dream of an Electric Arc Furnace powered by non-available renewable energy, they could simply build a Blast Furnace fuelled by coking coal. Just like that one in Redcar that we demolished a few weeks back. I wouldn’t bother using iron ore pellets though – they’re just an expensive distraction.
One of the main reasons cited by Blastr CEO Hans Fredrick Wittusen for choosing Teesside Freeport is it’s excellent connection to the national electricity grid. But that’s odd because, in October 2022, Ben Houchen was at the Tory Party conference complaining that Teesside’s poor grid connection was holding it back. There have been no changes to the grid connection since then, so either Ben’s statement back in 2022 was not wholly reliable, or he’s lied to the CEO of Blastr in order to win a “Green” Steel contract.
Journalists’ cut out’n’keep guide
- If Ben Houchen announces a “short-list” for an infrastructure project, don’t believe it until an actual contract has been signed.
- If Ben Houchen announces a “Letter of Intent” for an infrastructure project, don’t believe it until an actual contract has been signed.
- If Ben Houchen announces a “Memorandum of Understanding” for an infrastructure project, don’t believe it until an actual contract has been signed.
- If Ben Houchen appears in a photo op cosplaying as Bob The Builder, dressed in a hard hat and Hi Vis jacket, stop right there, and don’t waste any further time on it. He’d be more convincing if he dressed up as a lucky green leprechaun.