30 May 2025

Joe Potten, Team Lead, BCS Consultancy

Jingye, the Chinese owners of British Steel justified their decision to close the facility by reporting that it was making losses of around £700,000 every day and was therefore no longer viable to operate. These losses were as a result of increased tariffs of 25% on steel products being exported to the US; rising labour costs; price increases for the hard to source coke and iron ore raw materials needed to fire the furnaces; and further environmental regulation requiring increased carbon offset measures.

Protecting critical infrastructure

The government passed new laws in order to intervene and mitigate the imminent risk of closure of the plants blast furnaces due to the challenges of deactivating them while further decisions are made. Once turned off, it is not a simple process as reactivating the blast furnaces carries risks of structural damage and major H&S and environmental concerns. Relying entirely on imported steel is likely to leave the UK vulnerable to global supply chain disruptions and foreign market volatility and this action was also designed to protect jobs. It also acknowledged the strategic importance of steel as it is deemed vital for current and future national infrastructure projects.
Interestingly the data centre sector has recently been classified by the UK government as part of its ‘critical infrastructure’ and to put this into context there are around 50 data centres currently under construction in the UK equating to 268MW and another 2110MW of works in the pipeline.

The impact now and in the future

The interesting aspect in all this for me is that the Scunthorpe closures has brought into the fore not just what might happen if the furnaces are closed for good, but also what is happening now and has actually been happening for a while.

Steel costs remain elevated compared to pre-2020 levels and we are seeing costs in the market at circa £3,000-£3,500/t with the price likely to continue to increase. In the UK, this will of course be further exacerbated if Scunthorpe closes and, in the absence of suitable alternatives, we will also see longer lead times and a possible supply chain bottle neck which will impact the ever important ‘speed to market’ and ultimately project viability. At the very least there will be a lack of confidence that may lead companies to look to other geographies to site their data centres. This will be a large blow for the government and its plans to turn the UK into a global AI powerhouse as this will be largely reliant on having new data centres constructed. It will also impact the UK’s other key infrastructure commitments.

Finding an alternative

The issue here is that in reality most of the alternatives to steel are not without their own constraints. With regard to production techniques, electric arc furnaces are also proving to be a good alternative for some as they are low carbon and can be switched on and off easily depending on demand. However, with the lack of available power already a challenge in the UK this is not a viable option although some are planned for the future.

The recycling of old steel by melting it down and remanufacturing is also an option and is regularly used, however, carbon emissions are still produced through this processing method during the melting process. This is increasingly relevant as the data centre industry addresses the challenge of how to achieve its ambitious net zero goals. The Uptime Institute has predicted that this year will mark the start of a ‘challenging period’ for the data centre sector that is set to last until 2030, as “organisations struggle to meet sustainability goals and reporting requirements, battle with regulators (and even some partners), and strive to align their corporate goals with wide sustainability objectives.”

Introducing Emerald Steel

Emerald Steel refers to the reclamation and reuse of existing steel structures which bypasses the carbon emissions created by processing. It is not a new idea but the data centre sector alongside construction in general, has been slow to adopt it despite other clear benefits around the reduction of the embodied carbon. However, as demand for data centres continues and steel becomes harder to source and more expensive it is looking increasingly appealing– particularly in the light of increasingly stringent environmental targets and regulations. Other benefits include supporting the circular economy, ensuring ethically sourced materials and mitigating the UK’s exposure to the steel manufacturing challenges.

The steel is already here in existing buildings that are due to be demolished. The process itself is fairly straightforward and involves doing a survey to determine what existing materials can be extracted and then test it to ensure its quality, tag it to a central database and store it for future re-use. Site engineers and designers can then use the recycled and fabricated steel components on future projects and see what is available and suitable.

A new narrative

The key here is changing the narrative of how we introduce steel into these projects and getting the relevant organisations on board such as the European Demolition Association and CIBSE so we can all partner to overcome any barriers to the necessary mass industry take up to make this work. We will need to adapt the way we operate – something that we as an industry have proven to be good at time and time again. The rewards that the reclamation and reuse of steel bring will be worth the effort, aligning with the industry’s net zero targets and alleviating the pressure on available sources for traditional steel production. It will give us a greater independence in a volatile market and enable us to meet the demands for capacity both in the UK and across the globe.