IOM3 responds to UK Government Steel Strategy

IOM3 responds to UK Steel Strategy published following six-week consultation in March 2025.

The UK Government has published its Steel Strategy, setting out its aims to stabilise the sector, ensure its viability and to return domestic production to 40-50% of demand.

The strategy highlights that stabilisation will need to go together with a continued move to green, decarbonised steel production through a managed shift towards the use of modern and productive electric arc furnace (EAF) technology. It also acknowledges the need for continued access to primary iron sources, identifying direct reduced iron (DRI) as the most viable current means of domestic production.

IOM3 CEO Colin Church CEnv FIMMM said, ‘Publication of the steel strategy is an important milestone in recognising the foundational role of steel as critical to our national infrastructure and security, and a welcome sign of greater policy stability and clarity of direction from government. In response to the consultation, IOM3 highlighted strengths of the UK steel sector from world-leading research, development and innovation, to progress on the transition to low-carbon steel, and the availability of scrap in the UK. It also noted that despite its advantages, there are also major challenges facing the domestic steel industry that threaten its viability. The cost of operations, including high energy prices, presents a major barrier, as well as decades of low investment and global overcapacity. The transition to a circular economy and recognising scrap as a strategic resource will be fundamental for a thriving steel sector. It is positive to see these key issues reflected in the strategy.’

Towards its aim of defending against global overcapacity, the Strategy outlines new steel trade measures that will introduce tariff rate quotas with volumes that are ‘substantially lower’ than those under the current steel safeguard, and an out-of-quota tariff rate of 50% from 1 July 2026. The government will also explore the possibility of introducing requirements to identify where steel imports were melted and poured, in an effort to better understand supply chains and protect the UK steel industry from global overcapacity.

The government also acknowledges the need for direct support, committing up to £2.5 billion in funding through a range of mechanisms including listing support for existing sites and future support via the National Wealth Fund. Recognising the UK’s world leading research, development and innovation, the Strategy confirms that work is underway to set up an industry working group through the Steel Council to better align RD&I activities to the needs of industry with the aim of enhancing sector competitiveness.

Recognising the need for a resilient, cost effective and high-quality scrap steel supply chain, and the benefits of greater domestic circularity, the Strategy commits to establishing a new cross-government working group by May 2026. This group will provide a forum for ongoing engagement and policy development, assess the regulatory and market conditions needed to support innovation and investment for sorting and processing scrap metal, and tackle relevant barriers to the development of a high-quality domestic scrap supply chain. Alongside the need for optimised recovery and recycling systems, the Strategy notes there are also opportunities to grow markets in steel re-use that will be further explored in the forthcoming circular economy growth plan.

Dr Church continued, ‘The strong alignment between the key themes of the IOM3 submission and published strategy is encouraging, including the role of public procurement and the need to address the skills challenges facing the sector such as outdated public perceptions, an ageing workforce and an insufficient talent pipeline.’

‘The success of the Strategy in addressing the critical issues outlined will now depend on a clear, actionable delivery plan, supported by greater detail on implementation timelines. IOM3 looks forward to continuing to work with our members and with government to support its effective delivery and to help ensure a stable and thriving low-carbon UK steel sector.’