Heathrow Airport has signed a memorandum of understanding (MoU) with 7 Steel UK aimed at sourcing significant volumes of green steel from its electric arc furnace plant in Cardiff.
The agreement builds on Heathrow’s wider support for the domestic steel industry, following its signing of the UK Steel Charter last year.
Long-standing relationship
The MoU paves the way for a framework agreement and, ultimately, a long-term contract between Heathrow and 7 Steel UK, strengthening a relationship that spans more than two decades. Over that time, 7 Steel UK has supplied more than 150,000 tonnes of steel to Heathrow, including for the construction of terminal five.
If a third runway at Heathrow is realised, it would provide a significant boost for Czech-owned 7 Steel. However, Heathrow chief executive Thomas Woldbye has warned that, without clear endorsement from Prime Minister Andy Burnham, who has yet to confirm whether he supports expansion, investors will find other projects to finance globally.
Expansion plans
He said that failure to deliver a third runway, at an estimated cost of £33bn and which would not become operational until the late 2030s, would represent a huge missed opportunity for the UK economy.
The Department for Transport said it was reviewing responses to a consultation and was "considering the appropriate next steps".
Heathrow’s major investors, which include the Qatar Investment Authority, Saudi Arabia’s Public Investment Fund and China Investment Corporation, are expected to decide early next year whether to submit a formal planning application.
A third runway project could require up to 400,000 tonnes of steel, around a sixth of the UK’s annual production. Separately, Heathrow wants to modernise the existing airport by expanding terminal two and ultimately closing terminal three.
Industry reaction
7 Steel is the UK’s leading producer of low-carbon, circular steel, with its electric arc furnace turning scrap into high-quality steel products. Its Cardiff operation has the capacity to produce up to 1.2 million tonnes of crude steel annually.
Commenting on the MoU, Mr Woldbye said: "Expanding Heathrow would deliver real opportunities for people across the whole of the UK. This MoU is one such example. If expansion is approved, the MoU we signed today can help revitalise UK steelmaking and drive economic growth in South Wales.
"Our ambition to put Welsh-made steel at the heart of our expansion plans will create a pipeline of future orders for UK steel, and we hope that the scale of our project will lead the way for other large infrastructure projects to follow suit.
"We’re proud to be strengthening our relationship with 7 Steel UK, with businesses across South Wales and to be helping to drive a new era of industrial growth."
Carles Rovira, chief executive of 7 Steel UK, said: "This agreement with Heathrow is a landmark moment for UK steelmaking and a powerful vote of confidence in the future of our industry.
"Heathrow’s commitment to using UK-made steel demonstrates how major infrastructure projects can support the UK steel industry, domestic manufacturing, sustain highly skilled jobs and strengthen supply chains across the country.
"From our Cardiff base, we at 7 Steel are proud to be the UK’s leading producer of low-carbon, circular steel made from 100% UK scrap and to have supported Heathrow’s development for more than 20 years, including the construction of terminal five.
"This new partnership creates a strong foundation for future investment, supporting the work that the 7 Steel team and the rest of the stakeholders are doing every day.
"Expansion at Heathrow has the potential to be a catalyst for growth far beyond the airport itself. By placing UK steel at the heart of this nationally significant project, Heathrow is helping to demonstrate that reindustrialisation can be delivered through practical partnerships that create jobs, drive economic growth and support the transition to a more sustainable economy."
Peter Brennan, director-general of UK Steel, the representative body for the domestic steel sector, said: "This is fantastic news for British steelmaking and a powerful example of how major infrastructure projects can support UK industry.
"Heathrow’s commitment to 7 Steel demonstrates how backing domestic steelmakers can drive investment, support skilled jobs and strengthen our national supply chains. Heathrow has shown real leadership through its commitment to the UK Steel Charter, and this agreement is an important step towards turning that ambition into reality. We want to see other major infrastructure developers follow its lead, ensuring that more of the steel Britain needs is made here in Britain."
Paul McKenna, national secretary for steel at trade union Community, said: "Community has long argued that public and private investment should be used to support our strategically important steel industry wherever possible.
"This agreement between Heathrow and 7 Steel is a welcome example of that approach in action. It is another clear commitment that the benefits of expansion will be felt across the country by supporting good, skilled jobs in communities outside London and the south east.
"It is in the interests of our steelworkers that this project now moves ahead without delay and unlocks the opportunities it promises as soon as possible."
