Is steelmaking on Teesside in jeopardy?
Plus: Teesside Airport boardroom upset with Ben Houchen
The great social media migration of the liberal elite has begun in time for the eighth edition of The Teesside Lead. Of course, as an innovator, I’ve been on Bluesky since June 2023, however it really does seem like the tipping point is being reached in terms of the platform’s viability. I’ll continue to post links on X, but will be fully engaged on Bluesky. This topic has also been troubling the mind of The Lead’s national editor Dimi Reider, you can read this take.
It’s been a bit of a whirlwind week, where I ended up talking to Gordon Brown (you can read about that here). I dive into this week’s announcement that Ryanair have launched flights from Teesside to Málaga, but I start with a look at the potential future of steelmaking on Teesside…
There have been fresh concerns reported over the last week about the future of steelmaking on Teesside, as British Steel’s owners give the cold shoulder to the new government. The local impact could be huge, but it’s a part of a larger game of geopolitical brinksmanship.
In November last year, Tees Valley mayor Ben Houchen said he was bringing steelmaking back to Teesside, with the announcement of British Steel’s new electric arc furnace (EAF).
The caveat added to this by British Steel, which now seems to be biting, was that it was “subject to appropriate support from the UK Government,” (something I pointed out at the time).
The announcement was made at a time when British Steel’s Chinese owners, Jingye, were in discussions with the government about a subsidy package to close its lossmaking primary steel manufacturing in Scunthorpe, and to transition to greener production with EAFs. British Steel had pledged £1.25bn investment to build EAFs in both Scunthorpe and on Teesside, but only if the British Government chipped in the right amount.
The package on offer at the time to Jingye from the government to close its blast furnaces was worth around £300m. A huge sum, but much lower than the £500m offered to Tata Steel to do the same.
The FT has reported that Jingye were preparing to pull out completely in September, and Ben Houchen even said in an interview on LBC at the beginning of October: “We are going to see the closure of British Steel over the coming weeks”.
Two weeks ago Business Secretary Jonathan Reynolds held talks with Jingye chief executive Li Huiming to convince him not to abandon British Steel.
Sir Keir Starmer is expected to meet Chinese President Xi Jinping at this week’s G20 summit in Brazil, while there are also rumours a visit to Beijing is being planned for Chancellor Rachel Reeves in the new year.
Will steelmaking be on the agenda?
A Government spokesperson told The Teesside Lead: “This government will simply not allow the end of steel making in the UK. That’s why we’ve committed up to £2.5 billion of investment to rebuild the UK steel industry and support communities now and for generations to come.
“We’re working across government in partnership with trade unions and businesses, including British Steel, to secure a green steel transition that’s right for the workforce, represents a good investment for taxpayers and safeguards the future of the steel industry in Britain.”
A British Steel spokesperson told me: “We are in ongoing discussions with the Government about our decarbonisation plans and the future operations of our UK business. While progress continues, no final decisions have been made.”
Meanwhile, across the river, Hartlepool’s Liberty Steel is restructuring its businesses in a move which could see the taxpayer lose out on money it’s owed.
CEO Sanjeev Gupta’s proposed restructuring of Liberty’s Speciality Steel UK company would see some of its creditors, including HMRC, expect to be paid back less than what they’re currently owed.
Next week a hearing is due in the High Court of Justice into winding up Speciality Steel as the result of a petition from one of its suppliers, Harsco Metals Group. Liberty says it hopes to resolve the dispute before the hearing.
Liberty Steel has been in financial woes since its principal funder, Greensill Capital, collapsed in 2021. Greensill had borrowed up to $400m (USD) from the British Government, which it lent in full to companies owned by Mr Gupta. At the time of Greensill’s collapse, the National Audit Office warned a total sum of £335m of taxpayers’ money was at risk.
In March this year Liberty announced it would implement a new corporate structure to its UK businesses after securing $350m (USD) in loans from BlackRock and Silver Point Finance. Around the same time its Hartlepool plant secured the contract to provide pipes for the proposed carbon capture and storage scheme at Net Zero Teesside on the Teesworks site.
A spokesperson for HMRC told The Teesside Lead they can’t speak about specifics on identifiable individuals or businesses due to confidentiality rules. However, they added: “We take a supportive approach to dealing with customers who have tax debts, working with them to find the best possible solution based on their financial circumstances.”
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What role did Ben Houchen have in delivering Málaga flights?
Get your flip-flops and your suncream, pack your bags for the Costa del Sol. While thousands of residents have been evacuated from Málaga this week because of the risk from extreme flooding, the people of Teesside are being invited to book their holidays and arrive en masse at the resort as flights to the south of Spain have been announced from the local airport.
Lord Houchen made the announcement himself on his social media at 6am on Thursday, with a picture of himself swigging from a bottle of beer in front of Teesside Airport.
“At the election I made a promise to bring flights to Malaga from Teesside,” wrote Lord Houchen on social media, “TODAY, I am once again DELIVERING what I said I would do.”
However, I understand there’s frustration on the airport’s board for Houchen’s claims of personally delivering the flights himself.
Exactly one year ago, Tees Valley Combined Authority’s press team told me: “Ben Houchen is not on the board of the airport, is not a director, does not have any operational role at Teesside Airport and is not party to any such decisions relating to commercial agreements.”
Sources with knowledge of the board confirm this is the reason for their frustration.
“The publicity he brings is great,” says one source, “but all the local councils have a stake in the airport’s commercial operations, and they’re not getting their dues despite delivering these routes.”
They also said discussions about opening the route to Málaga were underway before Lord Houchen made his election pledge to begin flights to the resort from Teesside.
I spoke to aviation journalist David Casey, who told me, “The timeline for planning new routes varies widely depending on the airline and the specific route.
“It can take anywhere from a few months to several years, depending on factors like securing landing slots, negotiating airport agreements, ensuring fleet availability, and conducting market analyses.”
I tried contacting Ryanair on multiple occasions but they did not respond.
Ben Houchen did not respond to a request for comment.
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Thanks as always for reading,
Leigh