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Briefing: The UK steel industry and the green transition

EAF technology can produce all steel products and grades by managing the raw material mix, such as high-quality scrap, and mixing pig-iron or Direct Reduced Iron.

The UK steel sector:

  • Produces 6Mt of crude steel a year, around 70% of the UK’s annual requirement (annual demand of 8.9Mt).
  • Employs 39,800 people directly in the UK and supports a further 50,000 in supply chains.
  • The median steel sector salary is £39,637, 43% higher than the UK national median and 56% higher than the regional median in Wales, and Yorkshire & Humberside, where its jobs are concentrated.
  • Directly contributes £2.9 billion to UK GDP and supports a further £3.8 billion.
  • Directly contributes £4 billion to the UK’s balance of trade.
  • 96% of steel used in construction and infrastructure in the UK is recovered and recycled to be used again and again.

Background – transitioning to green steel production

Tata Steel UK has announced proposals to restructure its UK business as it transitions to green electric arc furnace steelmaking, responding to market demands for green steel, and meeting national Net Zero targets.

The UK and Welsh governments, along with Tata Steel, have established a Transition Board with up to £100 million to support affected workers and their communities and an additional £130 million to a comprehensive support package for affected employees, including redundancy terms, community programmes, skills training, and job-seeking initiatives.

This decision demonstrates the difficulty of operating in such a challenging steel market, with low steel demand, softening prices, and increasing costs greatly thinning profit margins. Decades of an uncompetitive business landscape have led to a lack of historical capital investment, leading to companies having to make the difficult choices between extending the life of aging blast furnaces at unsustainable cost, or investing in new Electric Arc Furnace (EAF) facilities.

British Steel has also announced a plan for £1.25 billion investment to adopt electric arc furnace steelmaking. The proposals, which await suitable support from the UK Government, mean that British Steel could install two EAFs, one at British Steel headquarters in Scunthorpe, and the second at the manufacturing site in Teesside.

Why Electric Arc Furnace (EAF) production? Can you make all steel products?

Past challenges

While existing UK EAF producers make highly specialised steel, producing all steel products and grades via EAFs has historically been challenging due to the quality of steel scrap supply. Some grades have tight limitations on residual elements, which has previously prevented these from being produced with EAFs.


Steelmakers are overcoming these challenges through technological advances and mixing different amounts of pig iron or Direct Reduced Iron (DRI) into the EAF melt to dilute the residuals from the steel scrap and significantly increase product ranges. Furthermore, tight control of the scrap supply and improved technology in scrap sorting have also demonstrated the ability to prevent undesirable elements from entering the EAF feedstock.

The greatly improved capability of EAF production has spurred European and North American steelmakers to invest in and switch to EAF production, as seen in Canada, France, Luxembourg, Austria, Germany, and the US. This allows for the use of recycled steel, vastly reducing production emissions and reducing dependency on imported raw materials.

US innovation

Examples from the United States show that it is possible to produce a vast range of products in an EAF.

US steel plants Nucor, SDI, and Big River Steel produce flat products and use an average of over 30% ore-based metallics (mainly pig iron) to control residuals, as well as only purchasing high-quality steel scrap (for example, scrap generated directly from the steelmaking process or highly sorted shredded end of life scrap).

The Big River Steel plant has invested in EAF technology only previously seen in integrated steelworks to achieve highly specialised grades. Their capabilities include producing products that cover the growing electrical steel market previously thought to be the exclusive provenance of the ore-based route by mixing scrap with ore-based metallics.

Investment from SDI in Texas has produced a thicker cast slab compared to the other mini mills to supply the local market for oil and gas pipe at heavy gauge. Nucor is developing capability to produce ultra-high strength material as the demand for these new products grows from automotive with the switch to electric vehicles.

UK experience

In the UK, Liberty Steel is already producing steel for the aerospace sector via EAF, which has a very low tolerance for residual elements, through careful scrap management. Sheffield Forgemasters produces highly specialised steel for the defence and civil nuclear sector via EAF. Marcegaglia Stainless Sheffield is the UK’s only stainless steel producer and does this in an EAF. Celsa Steel in Cardiff supports – quite literally – the UK construction sector by producing one million tonnes of reinforcing bars, all from steel scrap.

R&D is also pushing what can be made in EAF. Swansea University is leading a new research programme into the latest sorting and processing technology, which will reduce non-desirable residual elements from scrap steel. The UK is fortunate to possess a significant amount of scrap steel to supply for EAF production, meaning that, unlike blast furnace production, we have ample domestic supplies of the raw material needed. Currently there is not enough EAF capacity for this to be used and we export 80% of the scrap we generate.

As UK steelmakers respond to market demands for green steel from their customers, especially from the important construction sector, innovation will continue to expand what can be produced via EAF. Using our uniquely abundant scrap steel supply in the UK, along with DRI and pig iron, EAF is not expected to limit the UK steel industry’s capabilities, with technology opening more opportunities all the time.

Will we be the only G20 country without ‘virgin’ steel capability?

The claim that the UK would be the only G20 country without virgin steel production is factually incorrect, as Saudi Arabia’s (member of the G20) steel industry is 100% EAF. Whilst we may not wish to make a comparison, we could also look to Italy, a significantly bigger player in the global steel sector than the UK, where 84% of its production is EAF, 18.1 million tonnes, three times the UK steel output. The UK is not an outlier investing only in EAF technology for new capacity. All new investment plans in Europe, North America, Africa, and Central and Eastern Europe over the next couple of years are all EAF.

Is hydrogen-based steel production an alternative?

Whilst hydrogen-based steelmaking is an emerging technology, there are no demonstration plants operating in the world, let alone commercial operating plants. Hydrogen-based steelmaking is technically feasible, however, it is not expected to be imminently commercially feasible in the UK due to a number of barriers.

The main barrier is access to cost-competitive hydrogen, which the industry does not expect to be available until after 2035 at the very earliest. Hydrogen may only become competitive towards 2050 unless substantially subsidised by the Government. It would be possible to commission DRI natural gas-based steelmaking in the UK, followed by a switch to hydrogen when the technology will be proven commercially. It is also dependent on the cost of natural gas, which is relatively more expensive in Europe than globally. The recent substantial increase of gas prices would have worsened the business case. This would make using natural gas-based DRI commercially unattractive unless the Government intervened to provide significant ongoing support for it.

For further information, contact:

Jon Harrison, Regulatory Affairs Manager, UK Steel | 07743829613,