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New UK charter attempts to alleviate steel crisis

Amidst the backdrop of British Steel’s insolvency, trade association UK Steel has launched a new charter to maximise the amount of UK-produced steel used in construction and infrastructure projects.

British Steel - which employs 5,000 people, mostly at its Scunthorpe steelworks - entered into compulsory liquidation on 22 May after running aground.

The company says it has suffered from Brexit uncertainty, which has caused a drop in European customer orders. Talks with government failed to keep the company afloat, meaning it has now gone into official receivership.

The company will continue to trade and supply its customers while a new buyer is sought. Current major customers include Network Rail, which sources 95 per cent of its rail from the Scunthorpe plant.

Commenting on speculation about the UK steel industry earlier in May, Gareth Stace, Director General at the industry trade association UK Steel, said:

“As a domestic manufacturing industry, steel has an incredibly important role to play in our industrial future, supporting strategic sectors across the UK including automotive, construction and engineering. [We must] take bold steps to ensure that post-Brexit, the UK has a strong, competitive and vibrant steel sector that provides the foundation strength to a successful UK Industrial Strategy.”

The trade association has since launched a new ‘UK Steel Charter’, which was signed by government and several major private sector organisations on 20 May.

The charter aims to maximise the amount of UK-produced steel used in construction and infrastructure projects. Just over half of the steel purchased for domestic construction projects currently comes from abroad, meaning there is a huge potential to increase domestic procurement.

The public sector is the single biggest purchaser in the UK, with central government alone projected to purchase £2.5 billion worth of steel over the next five years. Huge volumes will also be required for massive private sector projects like the planned Heathrow expansion and offshore wind farms.

Gerald Reichmann, British Steel CEO, said on 20 May:

 “This initiative can help increase the amount of high quality steel manufactured in Britain going into thousands of domestic construction projects, something which will have a positive impact on the supply chain and wider UK economy. We encourage as many signatories as possible to sign the charter while informing all parties within the UK supply chain of this new approach.”

The UK steel industry currently produces 8 million tonnes of steel a year, employing around 32,000 people directly and supporting more than 52,000 further jobs in supply chains.

 

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