THE British government has taken over management of British Steel, a major supplier of rail products and services to railway customers around the world.
The government says British Steel’s owner, Chinese group Jingye, has confirmed its intention to shut down the blast furnaces at Scunthorpe immediately, which would jeopardise the future of steel making at the site, Britain’s sole remaining virgin steel production facility. Jingye said in March that the Scunthorpe site was losing £700,000 a day, which was “no longer financially sustainable,” and began consulting on job cuts.
Shutting down the blast furnaces would essentially end the production of virgin steel at Scunthorpe as the process of restarting the furnaces would be too difficult and costly. The government says that it made offers “in good faith” to Jingye to keep the blast furnaces operational in recent months, including an investment of £500m, but was left with “no choice” but to act after negotiations broke down last week.
“The move will maximise the chances of securing domestic steel production - a crucial national capability which was at risk of collapse under the site’s current ownership,” the government says. “This is a very specific intervention taken in exceptional circumstances.”
The government recalled Parliament from its Easter recess to vote on a bill on April 12 that provides it with emergency powers to prevent the site from closing down. It subsequently instructed management to continue operating the plant and stepped-up efforts to secure coking coal and iron ore pellets to keep the blast furnaces operational over the coming weeks.
Announcing on April 15 that unloading of coal and iron ore from the United States was in progress, the government said that a further shipment of coking coal was on its way from Australia. Funding for the site will come from the government’s £2.5bn steel fund, which it has allocated to help rebuild the steel industry over the next five years.
The company is not yet in full public ownership, although the government has not ruled out nationalisation. It is also seeking funding for operations from the private sector. The Chinese embassy in London has urged the government to negotiate with Jingye to find an acceptable solution for all parties.
Jingye acquired British Steel’s works at Scunthorpe and mills in Teeside and Skinningrove in March 2020, along with assets in the Netherlands. The deal did not include British Steel’s French operation at Hayange, which was sold to Liberty Steel in August 2020.
