UK risks influx of Russian steel via back door
Ministers urged to close import loophole that profits Kremlin at expense of British steelmakers
BRITAIN risks being flooded with backdoor imports of Russian steel that line the pockets of the Kremlin unless the Government acts urgently to close a legal loophole, industry bosses have warned.
Ministers are under pressure to close a loophole that allows millions of pounds of Russian steel to be imported via Turkey.
It comes as the EU cracks down on deliveries, raising the spectre that shipments will be diverted elsewhere.
The UK imported almost £500m of steel from Turkey in 2021. It is estimated that roughly 6pc of this was originally made in Russia before being processed in Turkey for British clients.
Turkey’s imports of slab steel from Russia are understood to have more than doubled in the five months to May compared with the same period last year, suggesting significantly more Russian originated steel may be coming into Britain.
Brussels is introducing tougher sanctions to prevent imports of steel to the EU that was originally made in Russia before being processed elsewhere into products such as sheet steel for the car industry.
The EU is to ban semi-finished products imported directly from Russia and ultimately ban any steel that was started in Russian mills before being rolled or processed in another country.
As the EU closes the loophole, British bosses now fear that Russian steel previously bound for the continent will be redirected here unless ministers act.
UK Steel director general Gareth Stace said: “The UK Government must act swiftly and decisively to close any loopholes which weaken our sanctions on Russia. Last month the EU extended its sanctions to cover Russian steel processed in third countries from October 2023, cutting off an important supply route for Russian steel producers.
“Given the UK’s ability to now act independently on these issues outside the EU, it is extremely frustrating that the UK has not already implemented similar sanction tightening. With the EU moving quickly to close the loophole, there is a very real risk that more Russian steel will be diverted towards the UK market. We must ensure our sanctions are as effective as possible rather than let Russian industry profit via the backdoor at the expense of UK steelmakers.”
Britain is increasingly dependent on foreign steel supplies. Last year 54pc of demand was met through imports, according to figures from the trade body Make UK.
In the late 1960s, the UK was the world’s fifth largest steel producer but it had dropped to 10th by the 1980s and 18th by 2015.
Russia is the world’s fifth-largest steel producer, just behind the US, and makes 10 times as much steel as the UK.
‘It is extremely frustrating that the UK has not already implemented similar sanction tightening’
It is also the third-biggest exporter, selling 32m tons abroad last year, worth about $29bn.
The EU ban is not immediate in some cases since policymakers were concerned about job losses in Europe. Much of Russia’s continued exports to the EU were from Novolipetsk Steel, or NLMK, one of the four biggest steelmakers in Russia.
It has plants in Belgium, France, Denmark and Italy employing 2,000 people, processing raw slab steel from Russia for cars, ships and offshore wind farms. It was allowed to operate this way as the steel is not considered a finished product until it is pressed into plate or strips of the metal.
The company said that it will be able to operate during a transition period, exporting more than 7m tonnes until September 2024.
A NLMK spokesman said: “NLMK respects all sanctions and legislation in place. We have invested more than €500m into developing our six steel rolling mills in the EU over the past five years. The two-year delay in application of import restrictions for semi-finished products allows temporary continuation of the business for these assets. However, structural slab supply solution beyond this period remains a significant concern as there is no availability of required semi-finished products from local sources, neither in terms of quantity nor quality.”