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These people aren’t serious

While the establishment media were focussed on the riot that didn’t happen, a much smaller – but bigger in its consequences – protest took place in Aberavon; a small and surprisingly pleasant seaside town to the west of the massive Port Talbot steelworks.  All of the fight had gone though – this was a pale shadow of the days when the massed ranks of the steelworker’s union could dictate terms to governments which still understood that steel is a strategic resource.  Indeed, almost all that remains of an industry which once built the world’s infrastructure, is the mendaciously named British Steel (it is owned by China) plant in Scunthorpe along with the Indian corporation Tata-owned plant in Port Talbot.  But both plants face closure unless the UK government stumps up the cash to refit the plants with electric arc furnaces to recycle, but no longer produce, steel.

Notably absent is any coherent response from the Marie Antoinettes in Versailles-on-Thames.  There was a time when even a Tory government faced with the closure of something as essential as steel making, would have drawn up the nationalisation papers in a matter of hours.  Indeed, in February 1971, faced with the loss of the key engineering company Rolls-Royce, Edward Heath’s Tory government (a neoliberal prototype) took just hours to nationalise the company.  But today’s political class has become so used to flogging off the national assets to the highest bidder that they no longer even consider whether those assets might be needed in future.

The same goes for the people who claim to be an opposition.  Although only the most gullible among us would believe anything coming out of the mouth of Labour leader Keith Starmer, he does claim to want to usher in a period of green growth based around a green energy transition.  So, here’s the thing; you can’t have an energy transition unless you can make enough steel to supply the proposed wind turbine factories.  And – like so much of the ill-thought green new deal – while it is theoretically possible to construct the new infrastructure using recycled steel alone, this is not how the real-world works.

Early objections to the use of recycled steel in construction concern the level of impurities.  As Monique Clement from Arizona State University explains:

“While a vast majority of the steel in the U.S. is recycled, it is inferior in quality to ‘virgin’ steel from freshly mined materials. Recycled steel often comes from automotive scrap, which contains copper impurities that cause cracking when reused.”

This may be a transitory problem, with improvements to recycling processes resulting in better quality steel – but you would want to be sure of that before attempting to deploy several thousand new wind turbines whose concrete bases and steel towers depend upon high-quality steel… and it is not as if Britain doesn’t have a track record of falling for industries that provide poor-quality materials while claiming they are fit for purpose.

Quality though, turns out to be less of a problem than quantity.  Steel recycling has a parasitic relationship with the wider steel industry.  Enjoying the “green” label – and the generous state subsidies that go with it – it is able to operate as a junior partner to the world’s virgin steel producers.  But there is nowhere near enough scrap steel to allow every, or even most steelworks to switch to recycling.

To be clear, in a capitalist system a “shortage” manifests as prices too high to be economical rather than an absolute disappearance of a particular resource.  In effect, if the highest bidder can pay more than you can afford, then you have a shortage even if someone else is still buying.  This, it seems, is a growing issue between China and Europe when it comes to key resources like steel.  As Halina Yermolenko and Vadim Kolisnichenko at GMK Centre report:

“In August 2023, the shortage of steel scrap supplies may increase by 2.1 million tons amid a potential reduction in supplies…  According to the consulting company Yongan Futures, in July 2023, the supply of scrap in China was 12.25 million tons, and the demand was 13.6 million tons. According to the forecast, although the demand for this raw material will not change in August, the supply has fallen to 11.5 million t, which will increase the deficit…”

Meanwhile:

“German steel industry federation WV Stahl has expressed concern about a possible future shortage of scrap metal in the country. A shortage of scrap can hamper the steel industry’s ambitions for decarbonisation.”

The problem is that steel is a highly durable material.  And so, steel cannot be scrapped at a fast enough pace to replace the loss of virgin steel as conventional steelworks are closed.  As the World Steel Association explain:

“In theory, all new steel could be made from recycled steel. However, currently, this is not feasible due to the scarcity of scrap. This is because of the long service life of steel products, given steel’s strength and durability.

“The average life of steel products ranges from a few weeks for steel packaging to up to 100 years for buildings and infrastructure. The average lifespan of a steel product is 40 years. This means there is a significant delay between steel being produced and being available for recycling. Continued growth in steel demand means that transitioning the industry to entirely scrap based production is unlikely to be possible during this century.

“Steel demand is growing at a faster rate than scrap is being released from the pool of ‘steel in use’. All scrap currently collected is recycled. As such there is only limited scope to increase scrap availability. Any future increase in availability will be drawn from the expected increase of post-consumer scrap availability.”

Countries – like Britain – whose governments lack the wit to maintain domestic strategic resource production will fare badly in the coming competition for key resources because we have little in the way of valuable exports to trade for them… especially if the unfolding financial crisis causes the City of London “services” which we have survived on for the last 40 years to collapse.  In this, steel is just the latest essential commodity that the UK’s political class has convinced itself we don’t need.  The UK famously relies on imports for nearly half (46%) of its food.  And even if it wanted to return some of that production, it will be hampered by a global shortage of fertiliser which is already causing export restrictions, and which cannot be overcome through domestic production.

In a recent book, Vaclav Smil makes the case that industrial civilisation depends upon four key materials – cement, steel, plastics, and ammonia:

“Modern societies would be impossible without mass-scale production of many man-made materials. We could have an affluent civilization that provides plenty of food, material comforts, and access to good education and health care without any microchips or personal computers: we had one until the 1970s, and we managed, until the 1990s, to expand economies, build requisite infrastructures and connect the world by jetliners without any smartphones and social media. But we could not enjoy our quality of life without the provision of many materials required to embody the myriad of our inventions.

“Four materials rank highest on the scale of necessity, forming what I have called the four pillars of modern civilization: cement, steel, plastics, and ammonia are needed in larger quantities than are other essential inputs. The world now produces annually about 4.5 billion tons of cement, 1.8 billion tons of steel, nearly 400 million tons of plastics, and 180 million tons of ammonia. But it is ammonia that deserves the top position as our most important material: its synthesis is the basis of all nitrogen fertilizers, and without their applications it would be impossible to feed, at current levels, nearly half of today’s nearly 8 billion people.”

Successive UK governments actively – through the sale of assets – and passively – by allowing industries to fail – have left the British economy dangerously exposed to shortages in all four.  Moreover, I would add a fifth essential substance to Smil’s four – the diesel fuel which drives our agricultural and industrial machinery along with the essential part of our transport system.  And as with Smil’s four essentials, successive UK governments have allowed domestic production to collapse well below a strategic minimum in the event, for example, that Russia was to really turn off the supply rather than have us import it via third countries.  As the New Automotive report:

“The UK consumes around 20-25,000,000 tonnes of diesel a year, around half of which comes from imports. Domestic production of diesel has been steadily declining in recent years, and increases in demand have been met by rising imports. Around a third of our imports come directly from Russia, and all told 18% of the diesel that goes in people’s cars comes directly from Russia.

“The UK’s second largest supplier of diesel is the Netherlands, which extracts next to no oil itself and is a trading hub with supplies of diesel and oil products largely originating from elsewhere, including Russia. Russia also supplies a tenth of our crude oil imports, some of which gets refined into diesel.”

It is hard to overstate just how precarious a situation the UK is in.  As the post-lockdown economies of the world restructure away from the neoliberal version of globalised “free trade” and toward more regional and local resource-based trading blocs, the UK economy remains dependent upon a financial services sector whose relevance to the emerging world economy may be considerably less important.  We have already brushed against the limits on government borrowing as a bridge between what we import and what we are able to pay for it.  And as the current lockdown/sanctions-exacerbated financial squeeze continues to gather pace, Britain risks losing access to vital imports while lacking the means to reproduce them domestically.

There was a time when the political class was recruited from the real world, with parliaments comprised of hundreds of members who had previously met a wage bill or worked on the factory floor.  Those people were serious precisely because they had a grounding in the real world, had experience of how things work, and knew how to get things done.  Today’s political class, in contrast, is a self-selecting clique which mostly has no grounding in the real world whatsoever.  Watching them sit back and allow the closure of the UK’s last blast furnaces – which, once shut down will never restart – is emblematic of a lack of seriousness which has infected British politics for the last half-century.  So much so, that it is doubtful that the political class could even act to save itself, still less the economy it is paid to preside over… and no amount of voting is going to change that.

As you made it to the end…

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