Before 1800 A.D., the iron and steel industry was located where raw material, power supply and running water were easily available. After 1950, the iron and steel industry began to be located on large areas of flat land near sea ports. The history of the modern steel industry began in the late 1850s. Since then, steel has become a staple of the world's industrial economy. This article is intended only to address the business, economic and social dimensions of the industry, since the bulk production of steel began as a result of Henry Bessemer's development of the Bessemer converter, in 1857. Previously, steel was very expensive to produce, and was only used in small, expensive items, such as knives, swords and armor.
Technology Steel is an alloy composed of between 0.2 and 2.0 percent carbon, with the balance being iron. From prehistory through the creation of the blast furnace, iron was produced from iron ore as wrought iron, 99.82–100 percent Fe, and the process of making steel involved adding carbon to iron, usually in a serendipitous manner, in the forge, or via the cementation process. The introduction of the blast furnace reversed the problem. A blast furnace produces pig iron — an alloy of approximately 90 percent iron and 10 percent carbon. When the process of steel-making is started with pig iron, instead of wrought iron, the challenge is to remove a sufficient amount of carbon to reduce it to the 0.2 to 2 percentage for steel.
Before about 1860, steel was an expensive product, made in small quantities and used mostly for swords, tools and cutlery; all large metal structures were made of wrought or cast iron. Steelmaking was centered in Sheffield and Middlesbrough, Britain, which supplied the European and American markets. The introduction of cheap steel was due to the Bessemer and the open hearth processes, two technological advances made in England. In the Bessemer process, molten pig iron is converted to steel by blowing air through it after it was removed from the furnace. The air blast burned the carbon and silicon out of the pig iron, releasing heat and causing the temperature of the molten metal to rise. Henry Bessemer demonstrated the process in 1856 and had a successful operation going by 1864. By 1870 Bessemer steel was widely used for ship plate. By the 1850s, the speed, weight, and quantity of railway traffic was limited by the strength of the wrought iron rails in use. The solution was to turn to steel rails, which the Bessemer process made competitive in price. Experience quickly proved steel had much greater strength and durability and could handle the increasingly heavy and faster engines and cars.David Brooke, "the Advent of the Steel Rail, 1857–1914," Journal of Transport History (1986) 7#1 pp 18-31
After 1890 the Bessemer process was gradually supplanted by open-hearth steelmaking and by the middle of the 20th century was no longer in use. The open-hearth process originated in the 1860s in Germany and France. The usual open-hearth process used pig iron, ore, and scrap, and became known as the Siemens-Martin process. Its process allowed closer control over the composition of the steel; also, a substantial quantity of scrap could be included in the charge. The crucible process remained important for making high-quality alloy steel into the 20th century. By 1900 the electric arc furnace was adapted to steelmaking and by the 1920s, the falling cost of electricity allowed it to largely supplant the crucible process for specialty steels.
Britain
19th century Britain led the world's Industrial Revolution with its early commitment to coal mining, steam power, textile mills, machinery, railways, and shipbuilding. Britain's demand for iron and steel, combined with ample capital and energetic entrepreneurs, made it the world leader in the first half of the 19th century. Steel has a vital role during the industrial revolution.
In 1875, Britain accounted for 47% of world production of pig iron, a third of which came from the Middlesbrough area and almost 40% of steel. 40% of British output was exported to the U.S., which was rapidly building its rail and industrial infrastructure. Two decades later in 1896, however, the British share of world production had plunged to 29% for pig iron and 22.5% for steel, and little was sent to the U.S. The U.S. was now the world leader and Germany was catching up to Britain. Britain had lost its American market, and was losing its role elsewhere; indeed American products were now underselling British steel in Britain.Carr and Taplin (1962) pp. 164–66
The growth of pig iron output was dramatic. Britain went from 1.3 million tons in 1840 to 6.7 million in 1870 and 10.4 in 1913. The US started from a lower base, but grew faster; from 0.3 million tons in 1840, to 1.7 million in 1870, and 31.5 million in 1913. Germany went from 0.2 million tons in 1859 to 1.6 in 1871 and 19.3 in 1913. France, Belgium, Austria-Hungary, and Russia, combined, went from 2.2 million tons in 1870 to 14.1 million tons in 1913, on the eve of the First World War. During the war the demand for artillery shells and other supplies caused a spurt in output and a diversion to military uses.
20th century Abé (1996) explores the record of iron and steel firms in Victorian England by analyzing Bolckow Vaughan & Company. It was wedded for too long to obsolescent technology and was a very late adopter of the open hearth furnace method. Abé concludes that the firm—and the British steel industry—suffered from a failure of entrepreneurship and planning.Etsuo Abé, "The Technological Strategy of a Leading Iron and Steel Firm, Bolckow Vaughan & Co. Ltd: Late Victorian Industrialists Did Fail," Business History (1996) 38#1 pp. 45–76
Blair (1997) explores the history of the British Steel industry since the Second World War to evaluate the impact of government intervention in a market economy. Entrepreneurship was lacking in the 1940s; the government could not persuade the industry to upgrade its plants. For generations the industry had followed a patchwork growth pattern which proved inefficient in the face of world competition. In 1946 the first steel development plan was put into practice with the aim of increasing capacity; the Iron and Steel Act 1949 meant nationalization of the industry in the form of the Iron and Steel Corporation of Great Britain. However, the reforms were dismantled by the Conservative Party governments in the 1950s. In 1967, under Labour Party control again, the industry was again nationalized. But by then twenty years of political manipulation had left companies such as the British Steel Corporation with serious problems: a complacency with existing equipment, plants operating under capacity (low efficiency), poor quality assets, outdated technology, government price controls, higher coal and oil costs, lack of funds for capital improvement, and increasing world market competition. By the 1970s the Labour government had its main goal to keep employment high in the declining industry. Since British Steel was a main employer in depressed regions, it had kept many mills and facilities that were operating at a loss. In the 1980s, Conservative Prime Minister Margaret Thatcher re-privatized BSC as British Steel plc.
Australia There were various iron-making ventures during the 19th century, and steel was made but only on a very small scale.
The first commercial scale production of steel in Australia was by William Sandford Limited at the Eskbank Ironworks at Lithgow, New South Wales, in 1901. The plant became Australia's first integrated iron and steel works in 1907. It was later expanded by Charles Hoskins. The first steel rails rolled in Australia were rolled there in 1911. Between 1928 and 1932, the operations at Lithgow were transferred, under the management of Cecil Hoskins, to a new plant at Port Kembla, still the site of most of Australia's steel production today.
The Minister for Public Works, Arthur Hill Griffith, had consistently advocated for the greater industrialization of Newcastle, then, under William Holman, personally negotiated the establishment of a steelworks with G. D. Delprat of BHP. Griffith was also the architect of the Walsh Island establishment.Cameron, David On an island in the River: The establishment of the Walsh Island Dockyard & Engineering Works, Newcastle, 1910-1919, by David Cameron, as presented to the Australian Historical Association Regional Conference, Newcastle, 28–30 September 1997), 1997. Retrieved January 31, 2018.Nairn, Bede "Griffith, Arthur Hill (1861–1946)", Australian Dictionary of Biography, Volume 9, (MUP), 1983.
In 1915, BHP ventured into steel manufacturing with its Newcastle Steelworks, which was closed in 1999. The 'long products' side of the steel business was spun off to form OneSteel in 2000. BHP's decision to move from mining ore to open a steelworks at Newcastle was precipitated by the technical limitations in recovering value from mining the 'lower-lying sulphide ores'.Jay, Christopher. (1999) A Future More Prosperous: The History of Newcastle Steelworks 1912–1999, The Broken Hill Proprietary Company Limited, Newcastle, p. 34. The discovery of Iron Knob and Iron Monarch near the western shore of the Spencer Gulf in South Australia combined with the development by the BHP metallurgist, Archibald Drummond Carmichael, of a technique for 'separating zinc sulphides from the accompanying earth and rock' led BHP 'to implement the startlingly simple and cheap process for liberating vast amounts of valuable metals out of sulphide ores, including huge heaps of tailings and slimes up to' high.Jay, Christopher. (1999) A Future More Prosperous: The History of Newcastle Steelworks 1912–1999, The Broken Hill Proprietary Company Limited, Newcastle, pp. 42–43.
Germany The Ruhr Valley provided an excellent location for the German iron and steel industry because of the availability of raw materials, coal, transport, a skilled labor force, nearby markets, and an entrepreneurial spirit that led to the creation of many firms, often in close conjunction with coal mines. By 1850 the Ruhr had 50 iron works with 2,813 full-time employees. The first modern furnace was built in 1849. The unification of Germany in 1871 gave further impetus to rapid growth, as the German Empire started to catch up with Britain. From 1880 to World War I, the industry of the Ruhr area consisted of numerous enterprises, each working on a separate level of production. Mixed enterprises could unite all levels of production through vertical integration, thus lowering production costs. Technological progress brought new advantages as well. These developments set the stage for the creation of combined business concerns.Norman J. G. Pounds, The Ruhr: a study in historical and economic geography (1952); Pounds and William N. Parker, ed., Coal and Steel in Western Europe; the Influence of Resources and Techniques on Production (Indiana University Press, 1957)