Iron and steelworks
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
1.1 This section applies to iron and steelworks and allied production units.
List description: steelworks and premises
Primary description code: IF2
Scat code: 142
Scat suffix: V
2.1 The hereditament
For the purposes of these instructions the following categories apply.
Integrated ironworks and steelworks
A blast furnace plant and its ancillary undertakings producing molten iron and operated as part of a big production unit devoted to the manufacture of steel using the BOS process. At the present time there are two integrated plants in England and Wales:
Special steelworks
Mini-steelworks and those which are engineering orientated producing high quality alloy and stainless steels by electric arc or electric induction furnaces.
2.3 Manufacturing process
2.3.1 Ore preparation
Home produced iron ores are seldom used today because of their low iron content and because they require much crushing and screening. The major plants operate on the richer imported ores which are usually received already crushed or in pellet form.
To produce end products having consistent pre-determined qualities, it is necessary to blend these raw materials and this is achieved by stacking out and reclaiming in a systematic manner. Blending is done on the ground by a practice known as ‘bedding’ where ores of varying but controlled qualities are laid out in horizontal layers by a boom conveyor to form long prism shaped piles. A reclaiming machine then removes these piles in vertical slices. Enquiries must be made to establish the foundation works of the stocking and bedding plant areas particularly under the rails of the distributor and barrel reclaimer.
Primary and secondary crusher houses are now largely redundant and have been replaced by screening plant to take out the fines.
Heavy bunkerage and extensive conveyor systems will be associated with ore preparation.
2.3.2 Sinter plant
Sinter is basically an agglomeration of iron ore fines, coke and limestone roasted together to form a clinker which not only has good physical characteristics to support the burden in a blast furnace but has also lost a proportion of unwanted volatile matter in the process.
Conventional sinter process is down draught sintering on a strand followed by hot screening, separate cooling and final cold screening and sizing.
The initial blending of ores, fuel and fluxes is usually done at the bedding plant with the final trimming and adjusting at the sinter plant. The blended mix is fed into a mixing/rolling drum which gives it some degree of granulation and there is a final moisture correction before it is spread on the sinter strand. The strand is a moving hearth composed of a series of pallets or pans in the form of an endless belt.
The mix passes under the ignition hood where the surface is ignited and the flame front moves down through the bed under the influence of air drawn down by powerful suction fans.
When discharged from the machine the sinter cake is broken up by a grizzly and spiked roll and passed to the hot screens.
Coolers are of similar type with air forced through the bed by axial flow fans.
Finally cold screening takes place and the fines are returned to the initial stages.
Sinter buildings are lofty, have several floors and there will be substantial foundations to both building and plant.
2.3.3 Blast furnace
In simple terms a blast furnace consists of a vertical shaft made of steel plate and lined with refractory brickwork tapering slightly both above and below the widest part where in fact the actual melting of the iron takes place.
Most, if not all, furnaces in the UK are free standing, located within a four column steel tower. The tower supports the superstructure, uptakes and downcomer, outrigger and platforms, charging gantry etc., and also the shell in an emergency should there be a failure.
The charge of iron ore, coke, sinter and limestone is admitted at the top through a double bell system or alternatively by gates and valves. Molten iron is extracted through tapholes at the bottom. Slag, which is formed by the limestone reacting with the earthy gangue around the ore and coke ash, floats on top of the iron and is removed from a separate slag notch.
The blast is in fact hot air (about 1,350°C) blown into the furnace through the bustle pipe and its tuyeres at a point just above the slag line.
There has been a tendency for furnace diameters to increase through the 20th century with 14 metre hearth diameter the largest built in the UK.
Around the blast furnace will be the cast house with a heavy brick surfaced and channelled floor some 7 to 8 metres above ground level.
There will be extensive raw material bunkers constructed in steel or concrete adjacent to the tail end of the furnace charging conveyor, and their stocks will in turn be supplied by feeder conveyors.
Also within the immediate vicinity there will be three or four “hot stoves”. These are upright cylindrical structures with two refractory lined chambers, one being a combustion chamber which burns blast furnace gas and the second to contain the grid packed chequer brickwork. A regenerative system is employed by first heating up the chequers and then blowing cold air through them thus extracting the heat before entry into the furnace - when one is on ‘blast’ the others are being heated up. The hot blast mains are lined with refractory bricks laid to a high standard in order to contain large volumes of very hot air under pressure.
At the end of the downcomer pipe will be found a gas cleaning system which incorporates primary and secondary dust catchers, then electrostatic precipitators followed by settlement tanks.
Each blast furnace complex will also include a power/blower house, boilers, steam turbines and probably turbo alternators for the generation of electricity.
2.3.4 Coke ovens
See Rating Manual: section 6 part 3 - section 270 for instructions on this type of plant.
2.3.5 Melting shops
Melting shop design usually follows the same pattern for example scrap bay, charging bay, furnace bay, ladle bay and casting or teeming bay. All bays except the scrap bay will have very heavy frames and massive foundation work.
Fume cleaning plant will be evident and usually in two forms, firstly direct from the furnace and secondly in an indirect form at ridge level. A great deal of money is spent protecting the environment from fumes and dust and much of the plant is rateable.
Electric arc furnaces
All electric arc furnaces are of a similar design consisting of a circular shallow bath with the hearth being acid or basic brick lined. Modern furnaces have removable roofs which lift and swing clear for charging purposes. Small and old furnaces may be encountered with a fixed roof and are side charged. The whole furnace is mounted on rockers or trunnions enabling it to be tilted in two directions, one for slagging off and the other for teeming. Melting is achieved by lowering carbon electrodes through holes in the roof on to the charge thus forming a circuit. When raised slightly the current jumps the gap and the arc so formed produces a temperature of about 3,400°C.
Refining of the steel can be done in the furnace with the current switched off by the introduction of oxygen by lance into the steel and causing an exothermic reaction. The trend is to do this operation in the ladle and thereby increasing the possible number of melts.
Electric induction furnaces
See Rating Manual: section 6 part 3 - section 430 for description.
2.3.6 Steel plant
Converter bays have a central core and typically measure 120m in length, 55m in width and 67 metres in height. Each often houses 3 vessels.
The area of a BOS plant building is typically large (circa 25,000m²) and comprises the very heavy steel framed converter core with platforms and stagings and very heavy steel framed scrap and charging bays each side of the centre section.
Fume extraction and cleaning to each converter is expensive and consists of a water cooled hood with a water cooled skirt which is lowered over the vessel during the “blow” - this is coupled to a water cooled flue up to the top level of the flue system. The fume is further cooled by water sprays, flue demist chambers, venturi scrubbers and finally flared off at the stack as it contains combustible carbon monoxide.
Basic oxygen furnace
The furnace (or converter) is essentially an open topped steel pot lined with refractory bricks and mounted on trunnions. It is fitted and charged first with scrap (approx.30%) and then hot metal. The furnace is returned to the vertical position and a water cooled lance is lowered into it and high purity oxygen is blown at approx. 14 BAR (200lbs per sq in) pressure, thereby rapidly raising the temperature to approx. 2,500°C. The oxygen combines with carbon and other unwanted elements, thus eliminating these impurities from the molten charge. During the “blow” lime is added as flux to help carry off the oxidised impurities as a floating layer of slag. No heating is required as the reaction is exothermic.
When the process is complete the steel is tapped off into a ladle and finally the converter is turned upside down to remove the residual slag.
Refined steel was then cast into ingots in the past and though this process is still found in some works, 90% of all steel is now formed into slabs, blooms or billets in a continuous casting machine (Concast). This is equally true of the electric arc furnace route of steel melting. Extensive platforms, foundations, cellars and run-out basements are usually found under a concast plant.
2.3.7 Hot mills
Hot mills are basically of two types:
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Primary mills rolling ingots but now largely replaced by Concast machines.
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Secondary mills rolling re-heated slabs, blooms and billets.
1. Primary mills
These comprise a stripper bay, soaking pit bay, primary or cogging mill, re-heat bay, roughing mill bay, finishing mill bay, cooling banks and possible shear and cut up lines.
Foundations are again important - a ground based mill train rolling 16/20 tonne ingots will be at least 3 metres under the primary stands and nowhere less than 1.5 metres deep. There will also be underground oil cellars, service tunnels, flumes, cable ducts and a useful guide is that there is more money spent below ground than above.
Modern practice is to build the mill floor at first floor level and infill the ground floor level with support services and buildings.
2. Secondary mills
Although not as heavy as primary mills, the component parts are similar and the same considerations apply. Blooms and slabs require re-heating for further rolling.
Blooms may be re-heated and finish rolled into rails, sections and beams providing they do not weigh less than 50 kg/m, also rounds over 100mm in diameter - these items being of sufficiently large cross section to hold their heat up to the last pass.
Slabs may also be rolled into plate (ie. flat steel 3mm to 76mm), in one stage and by the use of continuous mills, which are very fast in operation. It is possible to roll wide strip (8mm to 5mm thick over 457mm wide) without intermediate re-heating.
Re-heating furnaces are either batch type, continuous or walking beam. The latter are more common, often very sophisticated and invariably expensive - they may be single chamber, multi-chamber or zoned and consequently of some length.
Means of moving the charge will be in a number of different forms; examples are shaker hearth, monorail traypusher, disc hearth, roller hearth, rotary hearth, walking beam, saw tooth beam, link belt conveyor, mattress conveyor, chain conveyor, screw conveyor and slat conveyor.
At the end of the mill tables are cooling beds or racks which often consist of a series of horizontal rails supported on concrete piers above a pit. The product cools as it is moved across the bed to the discharge point. After rolling some products are given heat treatment in furnaces that may look similar to re-heats. Bogie hearth will be met on the batch variety, also types where the whole furnace body is lifted clear for loading and unloading. Heat treatment takes many forms e.g. annealing, blueing, carbonising, hardening, malleablising, normalising, stress relieving and tempering.
2.3.8 Cold mills
The purpose of cold rolling is to produce a regular thickness and a finished surface. For sheet this may be polished and suitable for coating and for strip the finish is perfect enough for direct forming by manufacturers of tableware etc. Reduction in thickness will be in the order of 2% for cold rolled sheet but considerably more for strip.
Cold reduction is preceded by descaling and pickling lines and the rateable items may include softening furnaces, pits, chambers, and some structural steelwork.
Sheet is invariably rolled on hand mills but strip is rolled by high speed reversing mills or automatic mills of very sophisticated design and with great precision. Particularly in stainless mills, rolling is performed in air conditioned and temperature controlled buildings so that the atmosphere is completely dust free.
Soluble oil is used for cooling purposes and is constantly being sprayed over the rolls and strip during rolling. The oil recovery cooling and filtration plant is quite extensive and elaborate and often sited below the mill floor in a labyrinth of basement chambers.
2.3.9 Rod/bar mills
Rods, bars and light sections must be rolled rapidly because of heat loss and continuous mills are invariably used. Rods that are rolled to wire emerge at speeds in excess of 190 km per hour and have to be coiled before cooling in order that it can be handled.
2.3.10 Tube mills
Steel tubes are of two main types, welded tubes and seamless tubes - the former are produced from plate and strip by bending to tubular form and welding the edge and the latter are produced from ingots and billets by piercing and elongating or from discs by cupping and drawing. The methods employed in these two processes are varied and beyond the scope of these instructions but the usual lines of re-heating, process finishing and despatch will be followed.
2.3.11 Foundry
See Rating Manual: section 6 part 3 - section 430 for details.
2.3.12 Unclassified other activities
Associated activities are numerous, usually specialised and beyond the scope of these instructions to deal with in depth. Some that could be encountered are forging used to make highly stressed steel components. Hammers have been largely superseded by automatic forging machines and hydraulic presses range up to 10,000 tonnes pressure capable of producing up to 140 tonnes forged weight. All processes will be accompanied by re-heating and heat treatment furnaces. Foundations are extensive and carefully designed. Hydraulic and pneumatic installations could be rateable in whole or in part.
Refining
High quality steels require more than the initial refining done in the melting furnace and it will usually be done in vacuum conditions. A whole new technology has been developed around these ‘de-gassing’ operations and a number of processes have been evolved to extract the molten steel from the ladle into a vacuum chamber and then return it. Refining in the ladle is a popular method and some systems require expensive and rateable pitwork into which the complete ladle is lowered, then sealed and the air pumped out.
Re-melting by induction furnaces can be done in vacuum or in electroslag furnaces where a cast ingot is re-melted in a copper lined vessel under a layer of slag which excludes air from the remelt.
Coating
An old established process of dipping and plating now developed into high speed tinning lines and acrylic coatings.
2.3.13 Central administration
Good quality office blocks will be evident usually air conditioned and well equipped with computer rooms and first class toilet accommodation.
2.3.14 Central maintenance
Central workshops are essential to maintain such a complex industry and will include machine shops, electrical shops, blacksmiths, stores etc.
2.3.15 Central water services
A vast amount of water is needed on an iron/steel plant for cooling, boiler feed and process. Rateable plant will include reservoirs, clarrifloculators and thickeners, cooling towers, filters and various tanks.
The valuation and of this class of property is the responsibility of the Industrial, Commercial and Crown Team within the National Valuation Unit (NVU).
Responsibility for ensuring effective co-ordination lies with the NVU Industrial, Commercial and Crown team.
There are no separate legal considerations for this class.
Relevant Case Law
Consett Overseers v Durham County Council (1922) 20 LGR 809.
Blast furnace plant. Whole hereditament may be in beneficial occupation although some parts (eg. individual furnaces that have to be relined from time to time) are normally out of action.
Cardiff Rating Authority and Cardiff Assessment Committee v Guest, Keen Bladwins Iron and Steel Co Ltd (1949) 1 KB 385 1 All ER 27 (CA).
Tilting furnaces, pipe mains and short life plant; test of whether any item is structural.
ICI v Owen (1954) 48 R & IT 43.
Plant used mainly in connection with the generation, primary transformation or main transmission of power.
Birchenwood Gas & Coke v Hampshire (VO) (1959) 52 R & IT 226 Coke Ovens, rate per cent to be applied; also imminent and expensive repairs does not in itself warrant a reduction in rent.
Ind Coope Ltd v Burton-upon-Trent CBC and Thomas (VO) (1961) RVR 341.
Air compressors as ‘process’ plant: Boilers: Rent from year to year would not be on the basis of annual adjustment.
Chesterfield Tube Co Ltd v Thomas (VO) (1969) RA 395.
Hydraulic pumps, hydraulic accumulators, air compressors and receivers rateable within Classes 1A and 1B of the Plant and Machinery (Rating Order) 1960.
J W Thompson (Chesterfield) Ltd v Thomas (VO) (1970) RA 201
Silo as a Class IV item.
British Steel Corporation v Pittock (VO) (1970) RA 423.
Refractory brickwork and linings in steel furnaces may form part of the structure of the furnaces even though they have to be replaced when consumed.
Sheerness Steel Co PLC v Maudling (VO) (1986) RA 45
Steelworks with excess capacity due to production and sales quotas; obsolescence on relatively modern works.
6.1 Guide to referencing
A guide to the referencing of cement works is held by the NVU Industrial, Commercial and Crown Team.
6.2 Plant and Machinery
Iron and Steel works and allied production units contain a considerable number of items of plant and machinery named in the relevant Valuation for Rating (Plant and Machinery) Regulations. Rateability should be tested in accordance with the principles set out in Rating Manual Section 6: Part 5: Plant and Machinery.
Enquiries should be addressed to the plant and machinery lead at the NVU Industrial, Commercial and Crown Team.
Rating surveys should be recorded manually in binders held by the NVU Industrial, Commercial and Crown Team.
8.1 Iron and Steel Works are highly specialised hereditaments rarely, if ever, let and the appropriate method of valuation is the contractor’s basis (see Rating Manual: section 4 part 3 - the contractors basis of valuation).
2 Unit of assessment
The unit of assessment should be ascertained in accordance with general rating principles.
8.3 Site
The site should be valued in accordance with the general principles set out in Rating Manual: section 4 part 3 - the contractors basis of valuation, see paragraphs 6 to 6.6.
Valuations for steelworks are held on the Non-Bulk Server (NBS).
All valuations are dealt with by the NVU Industrial, Commercial and Crown team.
1. Market Appraisal
Published data indicates that the production of crude steel in the UK has deceased between the pre AVD calendar years of 2014 and 2020 with a period of upheaval in the years around 2015-2016 with plant closures, company mergers and staff lay-offs. Published forecasts indicate a declining industry revenue picture over the five years to 2025-2026.
The number of operational iron and steel sites has decreased between the relevant AVDs.
2. Changes from the last Practice Note
With the exception of the market appraisal, there are no changes from the 2017 Practice Note.
3. Ratepayer Discussions
There have been no discussions with the Iron and Steel Works Industry.
4. Valuation Scheme
There is no scheme of valuation as Iron and Steel Works are valued by a limited number of National Valuation Leads who are part of the Industrial, Commercial and Crown Team of the National Valuation Unit (NVU IC&C). The properties will typically be valued using the Contractor’s Basis of valuation with the majority of costs being derived from the Valuation Office Cost Guide. The Contractors Basis of valuation is to be applied in accordance with VOA Rating Manual Section 4: Part 3: The Contractors Basis of Valuation, using the guidance in relation to each stage of the valuation process.
All integrated Iron and Steel Works in England and Wales are dealt with by the NVU IC&C Team.
All other works are ‘downstream’ (meaning further processing of the basic steel produced in integrated works) and vary greatly in size and complexity.
The relatively few steelworks dealt with in Regional Valuation Units (RVUs) will be non-specialised and valued by reference to rentals approach.
Where specialist equipment exists in a non-specialised steelworks the caseworker should consult with NVU IC&C Team.
1. Market appraisal
UK Steel Annual Review 2014
At page 1 the Chairman’s review states 2014 demand was +11.8% compared to 2013 but * A strong £
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Stagnation in European economies
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A high level of imports from China
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Falls in iron ore and coking coal prices
“meant that steel companies’ margins remained tight”.
The Director said:
Globally * “The global steel industry had an eventful year in 2014 characterised by weakening demand growth, deteriorating capacity utilisation, falling iron ore and steel mill product prices and a surge in Chinese export volumes”.
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World crude steel production reached a record high of 1,662 million tonnes
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Although the growth rate fell to <1%
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Excluding 2008/2009 growth has been around 8% for the last 10 years.
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Crude steel production capacity has increased at a greater rate than demand with the result that capacity utilisation fell to 76%.
EU market
- The EU steel market remained subdued
- Despite a 1.7% overall increase in crude steel production this level is -20% on the peak year of 2007.
- Market prices for steel mill products in general fell steadily during the year.
UK market * Crude steel production increased 1.7% in 2014 following 24% achieved in 2013 (largely due to mill improvements).
- Apparent demand levels were +11.8% on 2013, although gains of 24% in the first half of the year were tempered by a fall of 10% in the second half of the year.
Tata Steel is the major producer in the UK. Its Annual Report 2014/15 describes the position for European steelmaking as “challenging” although there are positive statements made about the future when compared to the low point of the recession which began in 2008.
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Page 12 – “Europe steel demand saw moderate growth last year but it continues to remain well below sustainable levels for steelmakers. Steel demand in Europe was the worst hit due to global economic downturn and is still 25% below the pre financial crisis level. This coupled with higher import levels squeezing margins means that the growth trajectory will be gradual…”
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Page 19 - “[Tata Steel Europe]…Despite lower turnover, the business made a significant improvement in its financial performance with EBIT turning positive at £103 Million”.
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Page 31 – “European steel demand is expected to return to modest growth in 2015. At 150 m tonnes it will still be 25% down on the pre crisis peak and 10% below the pre crisis norm of 165 mtpa…2015 steel margins can be expected to remain under pressure”.
It would seem therefore that the market for steelmaking in the UK remained “challenging” and that profit margins would be tight. Imports of excess production from other parts of the world is a concern. Nevertheless the outlook for the future would appear to be one of gentle improvement in economic prospects.
2. Changes from the last Practice Note
The Practice Note for the 2000 Rating List included co-ordination arrangements which are now dealt with in the Rating Manual section for the class.
3. Ratepayer Discussions
There have been no discussions with the Iron and Steel Works Industry.
4. Valuation Scheme
This is a class mainly dealt with by the NVU Industrial and Crown team and Unit Valuers. Those steelworks are valued on the contractor’s basis.
All 3 integrated Iron and Steel Works in England and Wales are dealt with by the NVU I&C.
All other works are ‘down stream’ (meaning further processing of the basic steel produced in integrated works) and vary greatly in size and complexity.
The relatively few steelworks dealt with in Business Units will be non-specialised and valued by reference to rentals/rentals comparison.
Where specialist equipment exists in a non-specialised steelworks the caseworker should consult with NVU I & C team.
Potential “state of industry” allowances
It is considered that the underutilisation issue highlighted in section 1 will normally reveal itself in unused or underused facilities on site. Allowances could potentially be made by considering a modern substitute hereditament capable of producing the reduced output.
It is not considered that the economic situation is sufficiently bad to warrant an allowance for “economic” issues at Stage 5 of a contractor’s basis valuation.
In cases of difficulty please refer the matter to NVU Industrial and Crown Team.
