1 week ago
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A deal to keep the blast furnaces at British Steel burning is “within sight”, a cabinet minister has said, as the government heads for crunch talks with the Scunthorpe plant’s Chinese owners aimed at avoiding nationalisation.
Jingye, which promised a “new chapter” in UK steelmaking when it rescued British Steel in 2020, said last month the site’s two blast furnaces were no longer financially sustainable, raising fears for the future of 2,700 workers.
The government has refused to rule out the possibility of nationalising the company, with Keir Starmer saying on Tuesday that “all options remain on the table”.
However, the culture secretary, Lisa Nandy, said on Wednesday that a “commercial solution” was still possible, as her cabinet colleague, the business secretary, Jonathan Reynolds, prepared for discussions with Jingye about the plant’s future.
Nandy told the BBC that British Steel would “continue to be an important part of our economy for years to come”, adding that a deal to secure its future was “achievable and within sight”.
Jingye has already rejected a government offer of £500m in support to help convert its two blast furnaces, which make “virgin steel” from raw materials, in an energy-intensive process, into greener electric arc furnaces that use scrap metal.
But the Chinese company is thought to have demanded closer to £1bn in funding to go ahead with the plan. Negotiations are complicated by timing and strategy issues.
The plant, which makes nearly all the steel that Network Rail uses for Britain’s train tracks, is understood to have just days left to order the raw materials required to keep the furnaces fed.
The government is also entering into the discussions without having completed a review of the UK’s steel strategy, a crucial part of which will be a verdict on whether the UK needs the ability to make “virgin steel” from scratch.
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The two blast furnaces at Scunthorpe are the UK’s last, after two at the Port Talbot site in south Wales, owned by the Indian conglomerate Tata, went cold last year.
The UK would be the only G7 economy without the ability to make virgin steel, if the Scunthorpe factory shuts down. Once blast furnaces have stopped operating it is prohibitively expensive to start them up again.
Simon Boyd, the managing director of Reidsteel, which is a customer of British Steel, told Today that government intervention was the “only solution”.
