* Experts say project will need at least 1 mln tonnes of
* Steel needs will be spread over nearly a decade
* UK firms will not supply all of the steel needed
* North European steel prices: tmsnrt.rs/2cK6HGN
* UK economic output by industry: tmsnrt.rs/2d4tTz8
By Maytaal Angel
LONDON, Sept 22 UK steelmakers will likely get
lucrative deals to supply the 18 billion pound ($23.5 billion)
nuclear power plant at Hinkley Point, not enough though to
secure the future of Britain's troubled steel sector, industry
UK steel firms are slowly emerging from a crisis that has
seen some 5,000 jobs, or a fifth of the workforce, axed since
last October, thanks primarily to rising steel prices and a
falling pound making exports more competitive. .HRC-NED=SI.
Britain approved the controversial, China-backed Hinkley
Point project last Thursday, firing optimism its construction
will also help arrest the steel sector's decline.
But to ensure its ultimate survival, the industry needs more
infrastructure projects that use British steel, lower energy
costs and crucially, more measures to prevent dumped or
subsidised steel from the likes of China from entering the
"It's good (news) ... but I don't think a Hinkley Point can
sustain British steelmaking for the next decade," Ben Orhan,
senior economist at consultants His, said.
EDF, the French utility that will build Hinkley
Point C in southwest England, has said more than 60 percent of
the project's construction spend will go to British companies.
Wales-based Express Reinforcements was named preferred
bidder to supply Hinkley Point with 200,000 tonnes of
reinforcing steel, which it will source from Celsa Steel UK.
This is 25 times more steel than was used in London's
Olympic Stadium and is worth some $84 million .RCB-NED=SI,
according to Reuters calculations.
EDF declined to comment on Hinkley Point's total steel
needs, but even if, as some experts expect, the project will
require at least a million tonnes of steel, this will be spread
over nearly a decade.
That is a fraction of the 10.8 million tonnes of steel
produced last year in the UK, according to the World Steel
EDF also declined to comment on whether Chinese steelmakers
will supply the project, though some worry this might be the
case given Hinkley Point is backed by $8 billion worth of
The European Union has ramped up trade defences in steel
over the past couple of years. It currently has 37 anti-dumping
and anti-subsidy measures in place for steel products, 15 of
them concerning China.
Since April, UK government rules mandate that all public
sector projects must consider the social and environmental
impact of the steel they source, and cannot just opt for the
most cost-effective bidder.
"This is the first major project announced since the
(government) procurement rules changed. As such it is the first
test for government," Gareth Stace, head of industry group UK
The UK government was not immediately available to comment
on how it will enforce its rules as regards Hinkley Point.
EDF has said the largest forgings, used in the nuclear
reactors, will be procured overseas as UK steelmakers do not
An industry source said French engineering group Areva
and a Japanese firm will supply the forgings. EDF has
a controlling stake in Areva NP, the group's reactor
Areva was not immediately available to comment.
Tata Steel UK, Britain's largest steelmaker, said
it has the capacity to supply much of the high-quality steel
required for Hinkley Point.
"We hope the wider value of using local supply for projects
like this is fully taken into account," a Tata spokesman said.
The UK's Liberty House Group said it will look to supply
products like plates for Hinkley, while British Steel, owned by
Greybull Capital, makes construction steel 'sections' and is
expected to bid. It was not immediately available to comment.
EDF estimates it will need 600,000 embedment plates and
about 50,000 tonnes of structural sections.
"Whenever something big comes up people get excited but we
need a multitude of infrastructure projects," a UK-based steel
industry source said. "No one project is ever going to solve an
($1 = 0.7651 pounds)
(Additional reporting by Susanna Twidale; editing by Pratima
Desai and Susan Thomas)