Energy Costs May Force UK Steel Plants To Shut Down, Tata Warns

  • Date: 17/02/14
  • Andrew Bounds, Financial Times

Tata warns it may have to close a number of its UK factories because of high energy costs that are at least 20 per cent above those in Germany and France due to green energy tariffs. Some UK work has already been moved to Thailand.

 

Apprenticeships at Rotherham and Stocksbridge

Tata Steel plants at Rotherham and Stocksbridge with a combined workforce of approximately 2,000 employees are threatened by closure due to rising green energy costs.

Manufacturers have invested heavily in energy efficiency measures but the future of the heaviest users is still threatened by high prices and supply issues, according to EEF, which represents the industry.

A joint survey by EEF and Npower, the energy supplier, found that about half of companies had changed their lighting and manufacturing processes to reduce energy use.

But Tata Steel, a big Npower customer, said its efficiency savings had been wiped out by price rises. Mark Broxholme, head of its specialist steels division, which supplies the aerospace and automotive sectors, told a business audience at the Cutlers Hall in Sheffield: “In the last three years, I have invested £7m and reduced the bill by £3m. I have just been told the bill is going up by £2.5m next year. I have spent £7m to stand still.”

The division’s total bill was £75m last year, with energy some 42 per cent of its cost base, five times the cost of workers, despite the group halving demand in the last decade.

He said a small facility in the Midlands might have to close because of high energy costs. UK prices were at least 20 per cent above those in Germany and France because of green tariffs he said. As generating capacity dwindles with the mothballing of coal-fired plants and nuclear power stations, tight supply means paying even more at peak times.

Since the division melts scrap metal to produce its high quality steel, it is greener than those producing from scratch, Mr Broxholme said.

Mr Broxholme said some orders had been moved to Thailand because it was cheaper, while Tata’s board could shut its UK plants in Stocksbridge and Rotherham, South Yorkshire….

Since 2002, the industrial price of gas has increased by 122 per cent, while industrial electricity prices have increased by 94 per cent

Green tariffs alone will add another 70 per cent by 2030.

Full story (subscription required)