REDCAR BLAST FURNACE: KEY CONSIDERATIONS ......Blast Furnace A Green Book Analysis based on figures from the STDC Business Case shows that the 20-acre Blast Furnace site, if developed

Summary of technical, financial and economic considerations around
the retention of the Redcar Blast Furnace
Prepared for the Teesworks Heritage Taskforce
by the Tees Valley Combined Authority
Introduction This briefing sets out the most pertinent points from the financial and economic cases for the retention and demolition of the Redcar Blast Furnace. It was created to aid the understanding of the Teesworks Heritage Taskforce in its consideration of the heritage assets on the Teesworks site, alongside consultation and expert opinion.
Extremely dangerous condition
At present, the Blast Furnace complex is in an extremely dangerous condition wholly unsuitable for safe public access. The current condition of the furnace complex poses a risk for trained and competent structural inspectors and it is proving ever more challenging for them to inspect the structures for defects and to monitor known defects within the structures. The overall stability of the Blast Furnace complex will only worsen without intervention. Steps that would enable the blast furnace to be developed so that visitors can be admitted are outlined in the South Tees Development Corporation (STDC) Redcar Blast Furnace Visitors Centre Suitability Study.
£35,230,000 to preserve the blast furnace for ten years
The cost of retaining the Blast Furnace plus building and operating a visitor centre for ten years is estimated to be £35,230,000. This is based on fixed costs of £25,410,000 and £982,000 annual running costs. These figures are based on the STDC Redcar Blast Furnace Visitors Centre Suitability Study and indicative costs provided by STDC.
827 jobs could be lost by retaining the blast furnace
The Business Case for the Regeneration of the STDC Site (2020), as submitted to Government, shows that the blast furnace site of 20 acres has the potential to sustain 516 direct jobs and as many as 827 when indirect and induced effects in the wider economy (supply chain etc) are considered.
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Six jobs could be created from a visitor centre
The STDC Redcar Blast Furnace Visitors Centre Suitability Study bases its assumptions on six jobs being created in the visitor centre. This could be considered a conservative estimate. This is 821 fewer jobs than STDC plans to create on the Blast Furnace site.
£161.4 million boost without the Blast Furnace
A Green Book Analysis based on figures from the STDC Business Case shows that the 20-acre Blast Furnace site, if developed as planned, would add £161.4 million to the Tees Valley’s economy over ten years.
Lost Investment Opportunity
Expenditure on retaining the Blast Furnace and associated heritage support will not deliver sufficient financial return to allow reinvestment in other Teesworks job creation. The capital investment in retaining the blast furnace would reduce the overall investment pot secured from Government to circa £100m, meaning that only 80% of the impact would be realised over the original programme period.
Appendices 1. South Tees Development Corporation (STDC) Redcar Blast Furnace Visitors Centre Suitability Study
2. Outline economic appraisal of the possible retention of the Redcar Blast Furnace as a visitor attraction
3. Indicative costs excluded from the Redcar Blast Furnace Visitor Centre Sustainability Study (2020) – Provided by the South Tees Development Corporation
4. Confidential: Full Business Case for South Tees Development Corporation: Site Regeneration
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REDCAR BLAST FURNACE: OUTLINE ECONOMIC APPRAISAL
Outline economic appraisal of the possible retention of the Redcar Blast Furnace as a visitor attraction - Prepared for the Teesworks Heritage Taskforce by the Tees Valley Combined Authority
Scope of this document
This document facilitates the comparison of actual and opportunity costs related to the Retention of the Blast Furnace.
This document is based on the findings of the following independent studies:
• STDC Masterplan (2019); • Business Case for the Regeneration of the STDC site (2020); and • Redcar Blast Furnace Visitor Centre Sustainability Study (2020)
These documents are supplemented by indicatives costs for exclusions noted in the Redcar Blast Furnace Visitor Centre Sustainability Study, provided by the South Tees Development Corporation.
Assumptions:
The Masterplan clearly articulated a heritage offering at the Blast Furnace Site and allotted 20 acres to address an unspecified function and demand.
The Redcar Blast Furnace Study reviewed the suitability of the Blast Furnace site for a Visitor Centre and the following aspects were noted:
• Retention Capital Costs: £20.8m (this assumes that the entire 20 acre site is utilised);
• Construction of a Visitor Centre: £2.6m (800 sq m visitor centre); • Ongoing costs £0.9m per annum.
The following impacts are noted:
• Retention Only: Gross Direct Cost: £20.8m: NPC: £15.45m (assuming 25% local sourcing of labour and materials (circa £4m incurred in year 1) and secondly the proceeds of scrap metal from redundant parts of the Blast Furnace (circa £1.35m)).
• Retention plus provision, maintenance and operation of a Visitor Centre (No Revenue Stream) (10 year Economic Life): Gross Direct Cost: £32m :
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NPC: £23.85m (assuming 25% local sourcing of labour and materials (circa £4m incurred in year 1) and secondly the proceeds of scrap metal from redundant parts of the Blast Furnace (circa £1.35m)).
• Retention plus provision of a Visitor Centre and assumption of 40,000 visitors by year 4 with average spend per visit £6.50: Gross Direct Cost: £32m : NPC: £22.15m. Assumptions based on Darlington Railway Museum as the most directly comparable proposition.
Even under the most optimistic projection for an onsite Heritage Centre (and assuming only negligible displacement with existing provision, such as Kirkleatham Museum), a relatively high number of visitors and no other land costs: this option creates a net present cost over the economic life of the project of: £22.15m (2020 prices)).
The STDC Regeneration Study did not specifically discuss the direct costs related to the demolition of the Blast Furnace. Rather, it considered that all redundant assets would eventually be demolished, with the economic surplus being invested in subsequent phases of demolition and redevelopment. The Blast Furnace site is within the North Zone, adjacent to the Net Zero Teesside Project and part of the 100 acres ascribed to clean technology related advanced manufacturing.
The STDC Regeneration Business Case confirms that if fully developed it will have the following outputs: 121,406 sq m of specialist business accommodation and 2,583 advanced manufacturing jobs, once fully operational. The report goes on to identify a wider (and very prudent) multiplier effect of 0.6, meaning that total direct, indirect and induced jobs could equate to: 4,133 or £200m of additional GVA per annum (prudently using regional average GVA per head) once fully operational.
To put this into perspective: Land Parcel R1a, which contains the Blast Furnace (100 acres), accounts for circa 15% of the total site set aside for the development of the clean technology advanced manufacturing cluster, the development of which has two interlinked criteria: pipeline of accessible land and creation of co-located integrated supply chain (minimising logistics and maximising circular economy solutions).
As well as the identified direct costs of retaining the Blast Furnace and provision of a visitor centre, there are also a number of other opportunity cost scenarios which need to be considered:
• Opportunity cost of using 20% of the land: Pro rated, retention of the blast furnace could reduce direct and indirect employment by 516 and 827 respectively, or a reduction in anticipated GVA per annum of £24.4m (on full occupancy in year 10 in 2020 prices and including scrappage value of £5.4m);
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• Opportunity cost to investment on adjacent advanced manufacturing site: Vivid Economics employment land assumptions were based on sizeable land parcels (this is the third largest such parcel of land ascribed for productive purposes). Reducing the land envelope diminishes flexibility of use and consequently demand. At the very least, this could mean a delay in uptake rate (10%), with a prudent assumption being that the site would be fully occupied by year 11 instead of year 10. An underperformance of 10% over the course of the development plan (potentially circa £88m of lost output over 10 years); and
• Opportunity cost of loss of recyclable investment fund to entire STDC site: As noted above the STDC regeneration model was predicated on using £124.7m of public sector funds to kick start the development of the Teesworks site. In the early stages, investment would be into those activities which were commercially viable and would therefore produce a return on capital which could be subsequently used for reinvestment (ultimately paying for the demolition of the Blast Furnace). Expenditure on retaining the Blast Furnace and associated heritage support has been demonstrated not to deliver the necessary financial or economic return (the most optimistic being a net cost of £23.5m after 10 years of operation). A capital investment in the Blast Furnace of £23.4m would, therefore, reduce the overall investment pot down to circa £100m, meaning that only 80% of the impact would be realised over the original programme period.
Note on methodology
In order to facilitate comparison between options, common costs (capital and operational) and benefits (GVA per job, visitor numbers and spend and scrappage) were identified and applied. A consistent programme period was also applied, based upon the standard economic life of a visitor centre and costs and benefits were discounted over that period using the Green Book approved 3.5% discount rate. This led to easily comparable NPC/NPV estimates for all options with attributable costs and benefits. A number of scenarios (opportunity costs) were also developed, but kept separate from the cost benefit analysis, as the magnitude of potential scale of impact would obscure vital messaging between options.
Conclusion
In summary, the Blast Furnace site of 20 acres has the potential to sustain 516 direct jobs or 827 (direct, indirect and induced) jobs in the wider economy, equating to a Net Present Value of £161.4m. Retention of the Blast Furnace and investing in a Heritage Centre would equate to a Net Present Cost of (£22.15m) over a similar 10 year period. In addition, there may be further opportunity costs to the wider Teesworks investment plan by spending in less productive activity, thereby reducing the overall investment pot by 20% with the possibility that only 80% of the impact would be realised over the original programme period.
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Possible Next Steps
The Teesworks Task Force may wish to request a Business Case to consider different Heritage-based offerings. The Steel Heritage Business Case would utilise the findings of the Taskforce to provide a detailed Option Appraisal for pans outlined in its final report.
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Blast Furnace Visitors Centre Suitability Study Technical Specification
PT No: E.ZX0M Rev: 00 Page: 1/21 File: RBF condition assessment R01.docx Printed: 2020-10-23 14:17
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VISITORS CENTRE SUITABILITY STUDY
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Revision History
Rev Description Made by Date Checked by Date 00 First Issue xx 30/09/20 xx 01/10/20
01 Monetary notation changed xx 07/10/20 xx 07/10/20
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Table of Contents
1 INTRODUCTION 5 2 SCOPE OF WORK 5 3 BLAST FURNACE LAYOUT & TERMINOLOGY 5 4 BLAST FURNACE – CONDITION ASSESSMENT 6 5 CORRECTIVE AND STABILISATION WORKS – COST BASIS 17 6 PROPOSED VISITOR CENTRE 20
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1 Introduction
The purpose of this report is to assess the current condition of the Blast furnace proper structure to enable a determination to be made into the suitability for a visitors’ centre to be established.
2 Scope Of Work
x Review of the current status of the blast furnace proper structure only, to allow safe access for visitors.
x Approximate cost to upgrade / modify the existing structure to allow safe access for visitors.
x Identification of a suitable location for a viewing platform together with approximate costs.
3 Blast Furnace Layout & Terminology
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Overview
Based on an visual inspection made on the 16th September 2020 utilising the access routes that had been deemed safe to use, it can be seen that the condition of the blast furnace varies dependant on its elevation and exposure to climatic conditions. The majority of access routes are in a severe state of dilapidation and are cordoned off to prevent injuries occurring. The major risks throughout the whole blast furnace site can be categorised into two areas.
1, Items falling from height,
2, Persons falling from height
Due to the risks mentioned above, routine condition assessments of the structures are becoming increasingly challenging due to the unsafe conditions of access systems and building fabrics. The condition of the blast furnace complex shall only further deteriorate with time.
At present the lower and middle blast furnace support structure are in an adequate condition to fulfil their duties. The furnace top tower structure is undergoing severe corrosion, which if left unattended shall accelerate, lead to failure and its inability to support the furnace top equipment and the dirty gas system.
The building fabrics are in a very poor state of repair, especially around the casthouses and ancillary sections of the plant. It is evident that many items have fallen from considerable
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height and shall continue to do so. The loss of sheeting / cladding shall lead to an increased risk of structure / framework collapse.
Corrosion mechanisms around the blast furnace are now very well established. This is more noticeable on the furnace top where it is exposed to external weathering events. The majority of painting systems on the steelwork structures have decayed to a point where pitting corrosion and crevice corrosion is prevalent. This shall eventually lead to the failure of structures.
Blast furnace lower support tower
The lower support tower of the blast furnace is a double slope structure in excess of 400te. From the available vantage points the tower structure showed no obvious signs of degradation or deformation that could immediately affect its load bearing capacity. It is anticipated that small repairs would need to be conducted to maintain its integrity.
Blast furnace middle support tower
The middle support tower of the blast furnace is the largest structure of the blast furnace and is in excess of 900te.
The top section of the middle support tower carries the load of the dirty gas system and transmits this load through the lower tower structure to the foundations. From the available vantage points the lower section of the middle tower structure showed no obvious signs of degradation or deformation that could immediately affect its load bearing capacity.
The top section of the middle support tower is exposed to the elements and the paint system has deteriorated. The structure is now undergoing severe pitting and crevice corrosion and has structural sections that have failed in places. The connecting splice plates of the tower structure show evidence of laminations and deformation at the joints.
Middle tower structure (upper section) heavily corroded Pitting corrosion and splice deformation on middle tower
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Blast furnace top support tower
The furnace top tower is a structure in excess of 400te and incorporates a double outrigger crane. The top tower support provides the support for housing the furnace charging equipment and also the access systems to the bleeder platform.
The top tower structure paint system has deteriorated, and the structure is now undergoing severe pitting and crevice corrosion and has structural sections that have failed in places. The connecting splice plates of the tower structure show evidence of laminations and deformation at the joints.
The outrigger crane splice plates are showing signs of deformation on the beam webs. This is evident at all four joints.
Pitting corrosion and failed section on beam Outrigger crane splice plate deformation
Outrigger crane support heavily corroded
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Casthouses
The building fabrics of the casthouse are in an extreme state of degradation due to loss of roof and wall sheeting. The exposed supporting purlins are showing signs of damage and corrosion. The west casthouse roof has experienced almost a complete loss of sheeting and the east casthouse has experienced partial loss and has many items of sheeting that have failed and are about to fall to ground. The wall sheeting’s are in the initial stages of failing with partial loss. The loss of wall sheeting shall only be exacerbated due to the loss of roof sheeting.
West casthouse roof West casthouse wall sheeting
East casthouse roof
Below the casthouse floor, the supporting structure is in good condition with the refractory brick protection still in place. The end connections to the casthouse floor look in reasonable condition.
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On the casthouse floor, the casthouse machines look in reasonable condition. Fallen roof sheets are evident in many areas of the casthouse floor. The iron and slag runners have been backfilled to allow for a level area. Pigeon carcasses and excrement is present in many areas of the casthouse floor.
West casthouse floor East casthouse floor
The tuyere platform is in good condition with the steelwork and its connections showing no obvious signs of serious degradation. The tuyere platform floor is complete with its refractory and concrete in good condition.
All 36 tuyere stocks and their respective copper cooling elements are in position.
Tuyere platform and tuyere stocks
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Main charge conveyor
The main charge conveyor supporting structure is showing signs of serious degradation due to corrosion on the trestles towards the head end of the conveyor. Support trestle bracings have completely failed in places.
The trestles towards the tail end seem to be in a reasonable condition.
The gantry support frames are collecting dust and debris in the webs of the structural sections which is increasing the corrosion rate in these areas with some sections already holed.
The conveyor belt has been removed to reduce the overall load exerted on the structural supports.
The conveyor sheeting is in reasonable condition with only small sections of flashing missing.
Support trestle heavily corroded at bolted connection Support trestle failed bracings
Support trestle heavily corroded braced connection Gantry frame supports
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Off gas system
The off-gas system comprising of the offtakes, uptakes, breeches and downcomer are in a poor state of repair and are showing signs of pitting corrosion. The rate of corrosion is more prevalent at the exposed areas. As the furnace is in the cold condition and with the presence of chlorides from the North Sea the rate of corrosion is expected to increase significantly. With sections of staircase and walkways attached to the off gas system, a deterioration of this system would reduce its ability to support items attached.
Downcomer corrosion Corrosion on the Breeches
Offtake corrosion
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Access systems
The majority of the access systems (staircases, ladders and walkways) throughout the blast furnace complex are in an extremely poor state of repair. Many access systems have been cordoned off as they pose a risk to users. Due to the limitation of access throughout the complex there are many areas that can’t be conventionally inspected due to the safety concerns. The following areas were unavailable for inspection due to access restrictions;
x Hot Blast Stoves
x Gas cleaning plant
x Fume extraction plant
Due to the access restrictions, the above-mentioned areas could only be inspected from a distance.
The main defects noted on the access systems include:
x Heavily corroded and holed stair stringers
x Heavily corroded and detached stair treads
x Heavily corroded and holed handrails, standards, mid rails and kick flats
x Sharp edges on handrails, mid rails and kick flats
Staircase with heavy corrosion and holed members Typical stair tread in the process of failing
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Ancillary plant and infrastructure
The ancillary plant surrounding the blast furnace is in a state of disrepair and has many risks for people accessing the area. The major risks like the rest of the plant are items falling from height or persons falling from height.
The sheeting to buildings is failing in many areas and this is exposing the inner structures and workings and shall eventually lead to a complete failure of the buildings fabrics.
The majority of column footings for the structures, gas mains and ductwork are covered in debris that shall accelerate corrosion and eventually lead to failure. The supporting steelwork is showing advanced stages of corrosion and many members are unserviceable with holed sections evident. Access systems around the ancillary plant cannot be used due to the unsafe conditions.
Cable containment in many areas has failed and cables are left unsupported. These cables shall eventually fall to ground.
Vent pipes around the stoves area are in a perilous unsecure state as nearly all have heavily corroded or failed pipe supports. The waste gas main chimney in the stoves area is showing signs of heavy corrosion with holed plate work in the top section.
Coke oven gas pipework throughout the blast furnace area is under a nitrogen purge due to the remnants of crystalline naphtha deposits within the pipework. This pipework is in a poor state of repair with leaks evident.
Fume extraction filter plant – sheeting loss Fume extraction – exposed filter bags
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Cable containment failure Excessive build-up of material around column footings
Holed gas main support trestle Vent pipes with corroded / failed support brackets
Waste gas chimney, heavily corroded and holed plate work Refractory heatshield with fallen refractory material
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Conclusion
At present the blast furnace complex is in an extremely dangerous condition and is unsuitable for allowing access to the public.
The current condition of the furnace poses a risk for the trained and competent structural inspectors and it is proving evermore challenging to inspect for defects and monitor known defects within the structures.
The overall stability of the blast furnace complex shall only worsen without intervention.
To enable the blast furnace to be developed so that visitors can be admitted, the following shall need to be undertaken to ensure the furnace’s integrity.
1. Remove all immediate risks of items falling from height.
2. Repair / reinstate access systems.
3. Conduct thorough structural inspection.
4. Conduct Refurbishment & Demolition survey for the presence of asbestos and take appropriate action to remove or encapsulate.
5. Repair deficiencies as per structural inspection report. Design considerations to be made for application of temporary works during repairs.
6. Implement corrosion protection systems (Coating and Cathodic) and monitor.
7. Demolition of ancillary buildings / systems.
8. Develop and implement a maintenance strategy to maintain the blast furnace integrity and prevent further degradation.
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5 Corrective and stabilisation works – Cost Basis
The costing basis has been calculated so that the following entities of the blast furnace are retained, and work undertaken to stabilise the structures and corrosion mechanisms: -
x Furnace proper.
x Dustcatcher and gas cleaning plant.
x Clarifier basin.
x Fume extraction plants.
x All Heat exchangers and cooling towers.
x All brick construction buildings.
x Waste gas chimney.
x Clean gas main after the gas cleaning plant.
x Cold blast main.
x All coke oven gas, nitrogen and natural gas pipelines throughout all areas of the furnace.
x All vent pipes.
x All storage tanks.
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Project Costs
To undertake the works required to allow visitor access to the blast furnace the following budget costs shall be considered.
Corrective works required to stabilise structures and create safe access £6,500,000
x Inclusive of all plant, equipment and materials.
Corrosion protection (Coating and Cathodic systems) £2,100,000
x Cathodic protection for column footings and lower steelwork.
x Coating protection for all other areas.
Demolition of existing ancillary entities £5,400,000
x As per item list on page above.
Site CDM infrastructure and management, consultancy and design works £6,800,000
x Site establishment and security.
x Management, supervision & staff.
x Design (stabilisation and temporary works).
x Architectural heritage design.
x Temporary works management.
x Building including utilities and fire protection.
x Disabled access.
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x Asbestos removal or encapsulation.
x The above costs do not include for any scrap recovery credits.
x Scrap processing from disposal area.
x Recovery credits on copper cooling elements from within the furnace.
x General site security.
x All demolition works are to ground floor level only and excludes removal of foundations.
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6 Proposed Visitor Centre
The focal point of any blast furnace complex is the casthouse floor where people can appreciate the machinery and systems in place to remove the hot metal from the furnace and subsequently separate the iron and slag.
It is proposed that an 800m2 (GIFA) building is constructed in the vicinity of the west slag pits as shown below so that visitors can view the overall blast furnace complex and receive historical information on iron-making within Teesside.
From the visitors centre a safe route should be established to allow for people to enter the west casthouse using the ramp on the north side of the slag pit.
Due to the inclined nature of the ramp this may not be suitable to lesser abled persons and an elevator shall be considered to allow access to the casthouse from ground floor level.
A hardstanding shall require creating around the area of the west slag pits and shall incorporate parking for buses etc.
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Maintenance management £185,000 / year
Maintenance works £285,000 / year
Electricity (200kwh) £212,000 / year
REDCAR BLAST FURNACE: DETAILED SUMMARY OF INDICATIVE COSTS
Indicative costs excluded from the Redcar Blast Furnace Visitor Centre Sustainability Study (2020) – Provided by the South Tees Development Corporation to the Tees Valley Combined Authority for presentation to the Teesworks Heritage Taskforce
1. Asbestos removal or encapsulation A report from DDM Demolition that estimates the cost of total asbestos removal connected with a full demolition of the RBF complex at £6M. In terms of the partial demolition proposed under a retained RBF scenario, I would assume the following • Asbestos removal (peripheral asset demolition): £1.0M • Partial asbestos removal (retained RBF) for safe access and usage: £1.0M • Encapsulation of asbestos where possible: £0.5M Asbestos removal cost: £2.5M
2. Scrap recovery credits
DDM assessed the total scrap metal content of the RBF complex at 30,000 tonnes. I would assume around 25% would be connected with the demolition of the peripheral assets, i.e., 7,500 tonnes. Scrap metals recovery credits: £1.35M
3. Scrap processing This is normally included in the demolition cost. But we can assume 7,500 tonnes for processing in this instance. Typical rates, including transport, range from £25.00-£35.00 per tonne, I’ve assumed £35.00 per tonne due the heavy duty nature of the demolition and related metalwork. Scrap metals processing cost: £0.26M
4. Recovery credits on copper cooling elements It’s unclear what if any copper elements could be recovered from the RBF under a retained scenario without incurring appreciable costs connected with their recovery. The assessment on copper contained in the RBF was estimated by STSC at around 750 tonnes. Assuming we consider that 100 tonnes is recoverable under a non-demolition scenario, and with scrap copper typically priced at £4,000/tonne, the position would likely be close to: Recovery credits – copper: £0.4M Cost of recovery: £0.1M Net recovery credits: £0.3M
5. General site security Fencing (1,000m): £0.25M
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Cameras, cabling, etc: £0.05M Security lighting: £0.05M Alarm systems: £0.05M Site security cost: £0.4M
6. Removal of foundations This is assumed to be related to the removal of foundations connected with the demolition of the peripheral assets. The area of such assets is around 20,000 sq. m, assume 0.75m thick throughout giving £15,000 cu. m of concrete Cost of foundation removal: £0.23M Processing: £0.2M Filling voids: £0.07M Removal of foundations – cost: £0.5M
Net position: £2.01M cost

Documents

REDCAR BLAST FURNACE: KEY CONSIDERATIONS ......Blast Furnace A Green Book Analysis based on figures from the STDC Business Case shows that the 20-acre Blast Furnace site, if developed